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VW to Create 200 Jobs at Wolfsburg; Porsche Sees New VW Law as "Superfluous"21 Jan 08VW is shifting worker allocation at its main site of Wolfsburg to cope with increased demand for the Golf, whilst its majority shareholder Porsche seems unimpressed with proposed changes to the VW Law.
Wolfsburg's Fortunes Improve... Europe's largest vehicle manufacturer Volkswagen (VW) plans to create 200 jobs at its headquarters in Wolfsburg, Germany, according to Die Welt newspaper. It is believed that the additional manufacturing staff will be moved from VW's Auto 5000 subsidiary to Wolfsburg in order to cope with increased production of the perennially popular Golf model. Auto 5000 produces the Touran multi-purpose vehicle (MPV), the Tiguan sports-utility vehicle (SUV) and the Golf and the plant has been working at full capacity in order to cope with strong global demand for the models. Founded in 2001, the unit is located on the grounds of the Wolfsburg factory, but in separate production halls from the mai' VW manufacturing operations. Using innovative manufacturing processes and new sales routes Auto 5000 GmbH represents a new form of competitive automotive production in Germany. ...As Porsche Threatens to Ignore New VW Law Meanwhile, following the news that the German government has drafted a proposal for changes to the so-called "Volkswagen Law" that will limit major shareholder Porsche's influence on the automaker, Die Welt newspaper says that Porsche views the government's plan as "completely unnecessary and superfluous". It was reported last week that the proposed legislation will continue to protect certain aspects of the VW Law after pressure from employee representatives at VW. This includes the requirement that any decision to move production to a different manufacturing site requires the approval of two-thirds of the supervisory board, 50% of which is made up of VW's labour representatives. Another demand is that the automaker must secure the backing of just over 80% of shareholders in order to gain approval for the final decision, which would continue to give the state of Lower Saxony a blocking minority (see Germany: 17 January 2008: German Government's Draft Law Seeks to Limit Porsche's Influence on VW). Outlook and Implications Increased production of the Golf is indicative of VW's wider good fortunes of late—in many aspects, 2007 looks set to become one of the most successful years in VW's history. For example, the Group set a new sales record in the first nine months of 2007, with 4.6 million vehicles sold worldwide. Sales revenue grew 5.1%, to 81.0 billion euro. At 4.3 billion euro, operating profit was up significantly year-on-year (y/y). The group's before-tax profit rose 3.8 billion euro in the first three quarters, to 4.7 billion euro. After-tax profit more than doubled, to 2.9 billion euro and the Board of Management continues to forecast that the full-year operating profit will substantially exceed last year's (before special items). However, not quite all indicators are pointing in the right direction, and the intentions of Porsche AG most definitely throw a spanner in the works, from the point of view anyway of those who seem determined to employ protectionist measures at Europe's largest carmaker. VW still has an expensive cost structure domestically when compared to other automakers in Europe despite having brought in a range of measures, such as redundancy and early retirement and longer working hours. Porsche Chief Executive Officer (CEO) Wendelin Wiedeking has already threatened to sacrifice some of the works council's "sacred cows" in order to achieve greater cost savings. New VW law legislation would restrict the room for progress due to the rules on the supervisory board should the unions consider it to have an adverse affect on the well-being of its management. It remains to be seen whether Porsche will mount a further challenge in Germany or against the European Commission to this legislation on the grounds that it could restrict the overall success of the automaker. Reports that Porsche intends to increase its stake in VW from the current 31% to above 50% suggest, however, that Porsche is not too unhappy with its lot and that it will carry on fighting this protectionist measure if it means further improving the competitiveness of the Wolfsburg giant. |
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