In the ongoing drama between Porsche and Volkswagen, the MSM tends to forget that this is also a tale of two unions. Volkswagen is organized, not to say owned, by the German metal workers union, IGM. With 2.3 million members, IGM is the single biggest union in the world. Half the VW supervisory board belongs to the unions. In case of a deadlock, the decisive vote lies with the stockholders. The unions can also count on the state government—with its blocking minority vote— being “sympathetic” towards their suggestions. Porsche has their own union representation: The Porsche Workers’ Council. So just as we’ve got Porsche – Piech battle royale, there’s an IGM vs. Porche Workers’ Council cage match. Let the games begin! Or, uh, continue.
On one side stands Uwe Hück, chairman of the Porsche Workers’ Council and former European Thai Boxing champion. On the other, we have Bernd Osterloh, who only looks like a former Thai Boxing champion. Osterloh represents Volkswagen‘s workforce. He’s the man who profited from the hooker scandal that shook Germany three years ago, when Volkswagen management tried to get the Union members on the supervisory board into a more sympathetic mood by paying for amusement trips to South America (mainly because Osterloh couldn‘t be linked to any of it, but there you go).
The troubles began early on, when Porsche decided to take over Volkswagen The company needed a new legal framework for Volkswagen. So they created the Porsche Automobil Holding SE, which now holds 100 percent of the Dr. Ing. h.c. F. Porsche AG as well as 51 percent of Volkswagen. As always, half of the supervisory board of the newly founded holding went to the unions. Porsche’s Uwe Hück negotiated the allocation of these board members with Porsche CEO Wendelin Wiedeking. As a result of these talks, the unions claimed 10 seats, divided evenly between the Porsche and VW unions.
Though no queen, Bernd Osterloh was not amused. He figured that the fact that Volkswagen employs almost 30 times as many workers as Porsche should be somewhat represented when it comes to the allocation of board members. Osterloh took Hück and Wiedeking to court.
Porsche won round one. The court ruled that since Porsche only held a minority of Volkswagen at the time the Holding was formed, they didn‘t need the approval of the Volkswagen workers. This did nothing to improve the relations between Volkswagen and Porsche and their respective workers. Osterloh told the press that Wiedeking had “dangerous phantasies of almightiness“ and that he wants to rule “with the arrogance of an autocrat.“
The next time the Volkswagen board met, the Porsche workers organized huge protests against the board members. With a little help from everyone’s favorite Satanic mechanic (VW’s Ferdinand Piech), Porsche subsequentally lost their votes on the board. All of them.
The power shift towards Wolfsburg leaves Bernd Osterloh is more powerful than ever. He’s made it clear that any merger would only receive his blessing if the workers‘ participation and the so-called “Volkswagen Law” remain unchanged. In other words, the status must remain quo.
Osterloh openly calls Porsche’s management “dilettantes“ and “nouveau-riches“ from Stuttgart. Obviously, the kind of merger that Osterloh has in mind is in reality a takeover of Porsche by Volkswagen. This pleases his counterpart from Stuttgart not one bit.
Nor was Uwe Hück happy when Piech and Osterloh dropped some unfavorable remarks about Porsche. The VW duo claimed Porsche is overleveraged, running out of cash and worth several billion less than the €11 billion the press has been talking about lately. In Piech‘s case, this could be seen as infringement of the stock corporation law, as he also sits on the Porsche supervisory board as a major shareholder.
Hück is threatening to drag Pieh and Osterloh into court. Meanwhile, Hück reckons Porsche should remain independent. The company is doing just fine, thank you very much. What’s more, Porsche workers stand behind the automakers CEO Wiedeking, whose contract expires in 2012.
On Sunday, we witnessed the latest installment of this soap opera. Volkswagen called off any negotiations with Porsche regarding the merger until further notice. It was Osterloh who initiated this move, who later told the press that he‘s missing the transparency on the part of Porsche needed for talks to succeed. Obviously, Osterloh wants to increase the pressure on Porsche and Wendelin Wiedeking, who‘s still looking for outside investors to help him take over Volkswagen.
Today we‘ll see the next episode. The supervisory board of Porsche is meeting in Stuttgart. Uwe Hück has already announced that there will be massive protests by the Porsche workers against Ferdinand Piech. Even so, as we’ve seen in other editorials on this site, anyone who bets against Piech does so at his own peril. Somehow, the man always seems to get his way. We shall see.
Do you think that porsche will consider using the “Opel” card at anytime?, i.e. “we’ll just sell or stake in VW and buy Opel”
Do you think that porsche will consider using the “Opel” card at anytime?, i.e. “we’ll just sell or stake in VW and buy Opel”
The connections between Porsche and VW are deep and generational. Opel doesn’t have anything to do with it.
All this bodes so much good for the UAW ownership of Chrysler and a good chunk of GM.
In the ongoing drama between Porsche and Volkswagen, the MSM tends to forget that this is also a tale of two unions. Volkswagen is organized not to say owned by the German metal workers union. …. Porsche has their own union representation: The Porsche Workers’ Council. So just as we’ve got Porsche – Piech battle royale, there’s an IGM vs. Porche Workers’ Council cage match.
Not quite true.
If there is one, then it’s a cage match between two workers’ councils while their bosses lock horns. Each company has its own worker’s council (Betriebsrat). The IG Metall (Industriegewerkschaft Metall, IGM) metal workers union is the same. Naturally, the Betriebsräte are dominated by the – one and the same – union. The union also doesn’t “own” VW. Not by a long shot.
The unions have a say in the running of the company, without having to spend the cash to buy shares: Through the dubious virtue of the Mitbestimmungsgesetz (Co-determination Act,) half of the seats of the supervisory board of German companies larger than 2000 people are reserved for the workers (white and blue collar, even executives.) In case of a tie, the chairman of the board – inevitably nominated by the shareholders – can cast a tie vote – as correctly written in your Part II of the Don Piech saga.
The German Supervisory Board (Aufsichtsrat) is not to be confused with the Board Of Directors of a US company. It only supervises. The executive Board of Directors (Vorstand) makes proposals. The Aufsichtsrat can only say yes or no, it cannot make its own proposals or give its own directions. But it can frustrate the life of a Vorstand. Especially, because the supervisory board also nominates – and fires – a Vorstand. Through the tie vote of the Chairman, the powers of the workers are limited. They can make their voice heard. They also are privy to the plans of the management. But if the Chairman inexplicably goes missing – as Piech did – the workers get their say.
What is happening in the Porsche/VW case is that the Porsche Worker’s Council wanted to take over the VW Workers Council, and, by extension, board seats, of VW taken over by Porsche. This of course didn’t sit well with their union comrades (yes, they use that word) in Wolfsburg. Porsche being taken over by VW (as the plan was until a few minutes ago) isn’t liked by the Porsche Workers’ Council, which would immediately get irrelevant. While Piech and Wiedeking fight for VW domination, the council bosses fight their own fights. And are being used to fight proxy wars for their bosses. It’s a bit more complicated than above, but in the spirit of brevity ….
Not quite true.
If there is one, then it’s a cage match between two workers’ councils while their bosses lock horns. Each company has its own worker’s council (Betriebsrat). The IG Metall (Industriegewerkschaft Metall, IGM) metal workers union is the same.
Actually, this was the editors mistake…although I might have been unclear myself in my draft…
Naturally, the Betriebsräte are dominated by the – one and the same – union. The union also doesn’t “own” VW. Not by a long shot.
…dunno… you could make a case here. Half the supervisory board belongs to them anyway and the state government won’t do anything with their blocking minority that could upset the auto workers who do have a big lobby…
What is happening in the Porsche/VW case is that the Porsche Worker’s Council wanted to take over the VW Workers Council, and, by extension, board seats, of VW taken over by Porsche.
Actually, I have never heard of Porsche workers claiming that they should get seats on the supervisory board of Volkswagen…As far as I know, it was all about the seats on the Porsche Automobil Holding.
And are being used to fight proxy wars for their bosses. It’s a bit more complicated than above, but in the spirit of brevity ….
Yeah, if you wanted to get into that as well, you’d have to write a book…
Rogeo, Tom. RF’s hand at work again. He should know better, having worked in the U.K.