Cultures ready to clash
VW managers uneasy about Winterkorn's team of ex-Audi chiefs
Jason Stein | | Automotive News Europe / February 5, 2007 - 1:00 am
The industrial German cities of Ingolstadt and Wolfsburg are separated by only 500km. But they are a world apart in terms of corporate culture and the performance of their two largest employers.
As former Audi boss and new Volkswagen group CEO Martin Winterkorn assembles his team in Wolfsburg, the two cultures are about to become one.
In less than a month, Winterkorn has appointed five of his former Audi executives to high-profile positions within the VW group. (See graphic)
But getting the two sides to willingly work together will not be easy, said multiple Audi and VW sources.
"You have completely different cultures. The people hate each other," said a former Audi and VW manager. "A guy at Audi will never accept something at VW. That's the biggest shift. And now [Audi executives] are taking control of Wolfsburg."
The two cities could not be more different.
Tucked into an anonymous section of the northern German state of Lower Saxony, Wolfsburg has long been considered a closed world to outsiders. It is a town built literally around VW to house workers at the factory in 1938. Half of the 120,000 citizens still work there.
VW has had a tough 18 months. It endured a highly public sex trial involving former VW managers; it saw the departure of two leading executives and it fought a fierce battle with unions to improve efficiency in its plants.
By contrast, in the southern German city of Ingolstadt, where Audi is headquartered, factories are full. Executives talk freely and openly about the company's plans. Audi will post an 11th straight year of record sales and maintain its surging profits.
New management style
Insiders say Winterkorn's first test will be to build consensus so that his team of executives can get VW to accept Audi's more open style of management.
People inside the company say that won't be easy.
"A lot of people in Wolfsburg are not happy that so many Audi people are coming in. There is a feeling at VW that it will create a managerial vacuum," said one mid-level manager at VW who requested anonymity.
"Second-tier VW managers already feel frustrated because their way of doing business has been altered drastically."
Three key players
Three of the most influential former Audi leaders who will have to make the new structure work at VW are: Walter de' Silva, head of VW group design; Jochem Heizmann, chief of VW group production; and Ulrich Hackenberg, head of VW brand development.
Those men will determine the direction VW takes in the near term.
Insiders say de' Silva's Audi design team was highly critical of VW's recent decision to copy Audi's single-frame grille and the exterior similarities on VW vehicles. At Audi group, de' Silva developed specific brand themes to ensure minimal overlap between Audi, Seat and Lamborghini. Now his task is make sure all seven VW group brands have distinctive looks.
Hackenberg needs to implement Audi's modular architecture system to achieve maximum flexibility at VW brand plants. But VW's factories are among the most inefficient in Europe.
That's why Winterkorn also will rely heavily on Heizmann to manage VW's capacity problems at its west German factories. It is estimated VW only uses 80 percent of its production capability at those plants, where wages are among the industry's highest.
At Audi, Heizmann was able to improve production efficiency by 10 percent a year each of the last three years. His work has made Audi's ambitious aim to build 1.4 million units possible by 2015.
Audi will be able to use its own plants for up to 1 million units of production.
The rest could come from VW group plants.
Industry observers said Winterkorn's appointments will leave a permanent mark on both companies.
"Audi has a lot of talent, and it has a significantly better way of handling these kinds of changes by promoting managers who are already very good," said Arndt Ellinghorst, an analyst with Dresdner Kleinwort in Frankfurt. "At VW, everything is broken up and reshuffled. We will see how it works."