Volkswagen’s home city enveloped in fear, anger and disbelief – CNBC
Another worker says: “Everyone is worried. Will we get our bonus still? Will there be job cuts? There is so much uncertainty.”
Outside the factory gates, few are keen to be seen speaking to the media. But this is a city in which VW is omnipresent, and a VW worker never far away.
Wandering around Wolfsburg, snatches of conversation about the carmaker can frequently be heard. “VW is sh*t, Wolfsburg is sh*t, why did we move here?” a woman shouted at her partner on one recent evening on Porschestrasse. In an Italian restaurant in the city centre located next door to VW’s governance, risk and compliance department, a man said: “If I were [Matthias] Müller [VW’s new chief executive], what I’d do is . . .”
Wolfsburg did not exist until the late 1930s when Adolf Hitler chose the windswept plain 75km east of Hannover as the location for his people’s car — what eventually became the VW Beetle. The city was even known as Stadt des KdF Wagens for the first few years of its existence after the Nazi’s Kraft durch Freude (strength through joy) leisure organisation. “An exemplary German working-class town,” was how Hitler described his project.
At the end of the second world war, the city became known as Wolfsburg and VW was resurrected with the help of the British army in whose sector of West Germany the town lay. Fast forward to recent times and the city in 2013 was Germany’s richest per head thanks to VW’s recent success and big bonus payments to workers.
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Signs of VW’s influence can be seen throughout Wolfsburg from the Ritz-Carlton hotel and its Michelin three-star restaurant next to the factory, to the science museum designed by star architect Dame Zaha Hadid.
Now the boom times appear to be coming to an end. Wolfsburg’s mayor has announced a budget freeze with projects including parking places at the hospital and an improvement of the swimming pool put on ice.
Corporate tax from VW is thought to represent as much as a third of Wolfsburg’s entire budget and that is expected to plummet as the carmaker’s profits are hit by fines and possible lawsuits, with the company already setting aside €6.5 billion for the scandal.
Another source of local concern is over the city’s football team, VfL Wolfsburg, who recently were defeated by Manchester United in the European Champions’ League. Despite denials from the club that their budget could be cut, VW’s new chief executive said he would look at every investment for potential reductions and the carmaker’s heavy football sponsorship — with ties to Bayern Munich and FC Ingolstadt too — is seen as vulnerable.
Bernd Osterloh, head of VW’s powerful works council, the representative body for employees, has gone out of his way to reassure workers, saying jobs are currently not in danger. In a speech on Tuesday, he added: “The November bonus payment will take place in any case . . . We are not paying the bill for the bad behaviour of a group of managers.”
But many are sceptical that job losses can be avoided. Günter Wolf, a local who is on his way to pick up a new VW Beetle cabriolet for his daughter, says he is afraid not just of job cuts but the wider fallout: “There will be economic consequences for Germany — that is my worry,” he adds. Mr Bendorf sees “lower car sales and jobs being lost” as one of the main results of the scandal.
However, there is also a widespread sense in Wolfsburg that for all VW’s problems the carmaker is being somewhat unfairly singled out. Mr Bendorf says: “It angers me that the Americans are asking us questions, and not somebody like China. I think it is being deliberately pushed by the US.”
A worker at Autostadt, a kind of theme park to VW that was built at great cost at the start of the century, says: “Who is polluting the air in the world? It’s not just cars, it’s airlines, big trucks, container ships. There is lots of pollution in the US and they don’t seem to care about that.”
Referring to General Motors‘ ignition switch scandal last year that was responsible for more than a dozen deaths, he adds pointedly: “At least we didn’t kill anybody.”
In Autostadt, VW customers can collect their new cars from specially designed glass towers. There is little sign of any wavering in affection for the carmaker.
Robbert van der Scheer, a Dutch owner of a VW Passat diesel, says: “I didn’t think they would be as stupid as this. They must have thought they would get away with it.” But asked about whether he would change carmakers because of the scandal, he replies: “VW is a good brand. It’s very solid. I would definitely buy another VW again.”
In Wolfsburg, however, the overriding concern is about the personal consequences of an affair that has scandalised the world. Mr Bendorf says he built his own house in Wolfsburg five years ago. “It is all completely dependent on VW — whether I can sell it, how much I’ll get for it. This scandal is not good for Wolfsburg,” he adds.