Survivor Herbert Diess stays on after another power struggle at Volkswagen

Survivor Herbert Diess stays on after another power struggle at Volkswagen

If it wasn’t conscious, it was at least symbolic. On Tuesday afternoon, Herbert Diess, CEO of the Volkswagen car group, posted a selfie on LinkedIn from a meeting room. He himself smiled broadly. In the background works council chairman Daniela Cavallo looked a lot less cheerful.

No other image could have better captured what had already been carefully leaked on Monday and Tuesday, including via The Wall Street Journal: the Austrian Diess is allowed by the supervisory board (SB) to stay on for the time being as CEO of Volkswagen (last year turnover 223 billion euros, 660,000 employees). A two-week power struggle – not the first – between works council (or) and chairman of the board comes to an end.

Since Diess took office in 2018, the board chairman and the employees’ club have regularly disagreed about the pace of the switch to electric driving and the consequences for staff. In short, Diess believes that Volkswagen must work much more efficiently to survive, especially now that electric competitor Tesla will soon open a factory in Germany. The Works Council fears that it will remediate fanatically and, using Tesla as an example, will alter the often favorable employment conditions. That American company has little interest in employee representation.

The most recent conflict erupted a few weeks ago. Diess is said to have said internally that 30,000 workers at the large factory in hometown Wolfsburg (60,000 workers in all) could lose their jobs if the company didn’t work faster on the electrical transformation. That typically Diessian, not very subtle threat of an all-or-nothing scenario frustrated OR chairman Cavallo. She mainly accused Diess of tweeting about his admiration for Tesla, while he was not even able to arrange chips for his own car factories.

Subsequently, Cavallo, who took office a few months ago, would have encouraged Diess to leave in supervisory board meetings. The outcome of this was actually expected two weeks ago, but several sessions were needed to come to the conclusion that Diess can stay after all, it seems now. He has enough support from other important supervisory board members. It includes representatives of major shareholders such as the Austrian families Porsche and Piëch, as well as Stephan Weil, Prime Minister of the state of Lower Saxony. His government also has a stake in Volkswagen.

According to The Wall Street Journal, Diess has to hand over some of his responsibilities as a result of a compromise. Diess is still partly responsible for the Volkswagen brand within the Volkswagen group, but that would now come to an end.

déjà vu

The arguing of the past few weeks is a déjà vu of the summer of 2020. Then a similar conflict played out. The difficult launch of a new car model led to much dissatisfaction among the works council. Even then, the supervisory board considered Diess’ position.

It has often been suggested in the German press that the conflicted and hyper-ambitious Diess – who indeed regularly expresses his adoration for Tesla’s Elon Musk on Twitter – may not be the man to lead Volkswagen. Due to its complex structure and multiplicity of interests, the mega concern is in some respects more of a mini-society than a company. Top executives have traditionally been a bit more timid than Diess – although they sometimes cheat with car emissions, like Diess’ predecessor Martin Winterkorn.

Also read this extensive profile of Herbert Diess: With the Volkswagen CEO, it is always a matter of waiting for the next conflict

At the same time, Diess also has another side. In the ranking of ‘electrical innovation’ that the authoritative German Center of Automotive Management presents every quarter, Volkswagen is the highest among German concerns (Tesla is well ahead). That is inextricably linked to the billions invested in electric driving under Diess. Investors are also satisfied with the CEO’s share price. On Monday and Tuesday, the Volkswagen share rose a few percent, after falling to its lowest point since the beginning of the year as a result of all the squabbling in recent weeks.

Survivor Herbert Diess stays on after another power struggle at Volkswagen
Source link Survivor Herbert Diess stays on after another power struggle at Volkswagen

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