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VW - History 7

In Germany nowadays, Hartz 4 (unemployment & social benefit) is unfortunately a not undisputed solution. The expression was coined after a concept made by Peter Hartz, who was poached from a steel company in the Saarland by Ferdinand Piech of VW in 1993, and given the position of human resources director. This initiated the second major reform after the rationalization of the VW-buying spree through Lopez. In the meantime, Peter Harz has almost been declared a 'persona non grata'. This is connected with the unrestrained announcement made by himself and the then current Federal Chancellor, Schröder in 2002 in the French Cathedral in Berlin, the statement was, that the unemployment was to be eliminated using a new concept. Hartz came from a humble background in the Saarlandand after studying business administration and a successful career as works director, he rose to the board of Saarbergwerke (Saar Mining). Here, through the steel crisis, 50.000 jobs were threatened. By using skillful mediation between the companies and the unions, Peter Hartz managed to reduce the workforce between 1975 and 1993, from 39.000 down to 11.000, without laying anyone off.

Thus, Hartz was brought to Ferdinand Piech's attention. At this time, the VW-concern had very serious problems, because of the dramatic fall in sales figures, insolvency was just around the corner. Even worse, they apparently had 30.000 employees too many, indeed, they could not be laid off because VW didn't have the money for their severance payments. Hartz, together with the unions, worked out a new, until then unknown model, 28,8 hours work in a four-day week without wage compensation, although the factory was producing five days a week. VW became a 'breathing' company, the savings effect made itself noticed straight away.

Indeed the new works director did not do everything properly. Perhaps he had to pay too much consideration to his relationship with his own shop stewards, the boss of which, Klaus Volkert, was given special-bonus payments, and benefits for his Brazilian lover. In this respect one must consider the special situation at VW, where the management and the shop stewards had always had a close relationship. Nordhoff once called his workers 'fellow workmates'. Also under Piech, the chief shop steward was included in the actions of the board of directors, he used all the perks and aids including the stand-by flight service, he did however assist in solving sticky problems as far as labour relations in other countries were concerned. Hartz called this 'value-producing employee participation', praises about the development of the company, to which the IG-Metal (metalworkers union), also attached themselves. One may rightfully doubt, whether e.g., the purchase of the many subsidiaries at the time was carried out at the express wishes of the shop stewards, or whether their cooperation was bought by awarding them special benefits.

Nowadays, in any event, the concern profits from its commitment and can easily compensate for crisis like those in southern Europe. The question of who is really responsible for the success of VW today, will probably never be able to be answered accurately. There is, by the way, another reason for the company's activities. The city of Wolfsburg was also badly hit by the crisis, the unemployment figure rose to 18 percent . With 60 percent of the jobs in Wolfsburg being at VW, the city is simply too dependent on the factory. Other areas, like the service- and supplying field are sub-normally represented. The latter are being 'asked', to move their activities closer to the factory. A human resources agency with space for 80 enterprisers was created. The motor-city was planned, which would turn the picking up of a new car into an experience and would soon induce the entire industry to follow suit with similar actions (museums and experience-worlds). By the way, Peter Hartz is also responsible for this and other 'presents' made to the city of Wolfsburg on its 60th birthday in 1998. This also included a new stadium and the championship honours for the VfL (football club).

The way that Hartz dealt with the deciding employees in the company, thus, also the shop stewards, included the manifold benifits awarded to the individual members of the shop stewards association. At the end of the day, there was probably no chief shop steward in Germany who earned more than the one at VW. Bit by bit pleasure trips were subsidised, and that, not only for the VW-employees. Nothing however, could be proved connecting Piech with this clique. He was merely required to stand as a witness in a part of the proceedings. In 2001, a further approach was made for the solution for a high-wage country. VW announced that the new Touran (see above picture) would be built abroad. As a result the Auto 5000 Ltd was created, thereby, 5000 new employees would each earn € 5000 gross, indeed this was dependent on the number of cars built.

Although this target was never reached, this model was a total success. In due course this was extended also to the Tiguan and in 2009 all the workers were taken on as staff members. Peter Hartz did not remain long enough to see the success-story of Auto 5000 at VW. In 2002 he was appointed to chairman of a commission which was to make proposals to the Federal Government concerning improvements in the labour market processes. These proposals were then named Hartz 1 to 4, whereby the last mentioned was accepted by the government, this resulted in a great deal of critisism aimed at its namesake. He reproached himself, for having announced that this would halve the unemployment, which would only much later be acchieved.

Piech proved himself to be a clean-up man and promoter. The latter, e.g., through the purchase of marques or even just their brand-name: Bentley, with the legendary factory in Crewe, Bugatti with the resumed building of a super-sports-car in Molsheim, Lamborghini side by side with Audi and the Glass Factory in Dresden where the final assembly of the Phaeton would take place. The refurbishing in Mexico was running well, and although a lot was being done at Seat, up to today (2012) they haven't managed yet to get out of the red.

In connection with the numerous take-overs a concept was realised, which up to now, was without precedence, indeed, it can probably only convince the car-buyers who have very little interest in the actual technology in their vehicles. An entire category is given not only the same engines, but also the complete platform, everything that is needed for the operation. This is where the name 'platform-concept' comes from. All that was different was the 'hats', as Piech called them, i.e., the bodywork and the interior design. Thereby, even the switches and handles can be the same, if one does it cleverly. All in all, using this method, one can of course, save an unbelievable amount in development- and production.

If one looks closer, Piech's interests in the larger, high-tech saloons, e.g., the Phaeton, were greater than in the products on the other side of the scale. He did however, also set the pace here, even if it wasn't long lasting enough. After all, artificial cars with a consumption of 3 liters per 100 kms have been hand-built in Wolfsburg, which are neither for the factory, nor for the future customers even remotely economical. The only sensible product, the four-seater, aluminium bodied Audi-A2, which had similar technology, flopped out because of the high price, the design and the failing follow-up development.

Nonetheless Ferdinand Piech, even towards the end of his term of office in 2002, never slowed down, he personally drove a single cyl., Diesel powered, cigar-shaped vehicle without any heating, from Wolfsburg to Hamburg in April and achieved an average consumption of 0,89 Liter/100 kms. This goes to show just what technology would be capable of, if it was affordable. What we actually need, is rather a car, which despite being very economical, limits us as little as possible and doesn't pose unsurmountable hurdles for the normal buyer, neither in the case of the purchase price, nor as far as the maintenance and repair costs are concerned. Unfortunately, I fear we are still miles away from this situation.

VW, in the taking over of other companies, avoided making the gross errors that, e.g., BMW made with Rover, or Daimler made with Chrysler. Ferdinand Piech was given the blame for the failed takeover of the Rolls- Royce marque. His predecessor hit the jackpot with the takeover of Skoda, which afforded the company a high acceptance in eastern Europe and, with the fall of the Iron Curtain, brought enormous success. Unfortunately, other subsidiaries were a different story altogether. Seat, which was bought at about the same time, showed signs of weakening quite early, despite a great deal of financial investment. Piech recognised the error of failing control mechanisms, went into negotiations with the unions in Spain and with the Spanish government, indeed, right up to the end of his term of office, he was not able to really reverse the tendency.

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