Bernd Osterloh, labour nemesis of Volkswagen’s boss, abdicates

“THE MOST extremely effective man at Volkswagen.” Ferdinand Dudenhöffer of the Centre for Automobile Research, an influential assume-tank, was no longer referring to Herbert Diess, the German company’s boss. Moderately, he reserved that title for Bernd Osterloh. In his 16 years as head of the carmaking personnel’s works council, which represents workers, Mr Osterloh organised his possess roadshows and travelled along with his possess entourage (at the side of a translator). His press personnel was bigger than Mr Diess’s. Some traders mistook him for the huge company’s chief executive and wondered why he did no longer talk any English.

Then, on April 23rd, Mr Osterloh announced he was resigning. He was widely anticipated to defend till the next works-council election in March 2022—after which for one other three-yr term. As an different, on Can also 1st he’ll interact over as personnel chief at Traton, a lorry-maker that is portion of Volkswagen. Daniela Cavallo, his 46-yr-old deputy, will receive his old post.

Works councils play a colossal characteristic in all German companies with more than 2,000 workers. Staff can nominate half of the individuals of the supervisory board, which oversees the administration board below the country’s two-tier structure. At Volkswagen they wield even more affect thanks to the 20% voting portion that Lower Saxony, home to its headquarters in Wolfsburg, has within the personnel. To give protection to investment and jobs within the Land, it backed Mr Osterloh and the board’s other nine labour representatives. They in turn listened to IG Metall, the metallic-workers’ union to which nearly about all Volkswagen workers belong.

The distinguished motive for Mr Osterloh’s surprising exit was a rare boardroom defeat. He had tried to tumble Mr Diess, who needs to push Volkswagen into the electric age. That methodology retraining many of its 665,000 workers or getting them to retire—anathema to the works council if it outcomes in job cuts. In December the supervisory board gave the CEO its elephantine backing. A mosey to a cushy job with a reported annual wage of €2m ($2.4m) is more seemingly to be considered as a face-saving system for Mr Osterloh to lick his wounds.

Irritable corporate governance has made Volkswagen’s flagship VW designate the arena’s least-aggressive colossal one, thinks Arndt Ellinghorst of Bernstein, a dealer. The personnel derives 60% of obtain profit from two top fee marques, Audi and Porsche. VW and the opposite nine largely mass-market brands invent miniature money outside China, which accounts for one other 20% of earnings (apart from Audi and Porsche). To swap this Mr Diess need to gather along with Ms Cavallo. A talented economist, she is calmer than her faulty mentor, who started on the shop floor 44 years ago. She can be less averse to the sale of peripheral brands similar to Ducati, a motorcycle-maker, which Mr Osterloh blocked. Convincing her to construct up deeper changes can be more challenging. ■

This article appeared within the Switch portion of the print edition below the headline “The king of Wolfsburg”