Unions Tell Volkswagen To Get Rid Of Consultants In Order To Save Money

Volkswagen's 5 billion euro ($6.68 billion) cost-savings plan hit a major setback after labor leaders forced management to ax McKinsey, the consultants working out the cuts, three sources with knowledge of the matter said.

The move underlines how much relations between management and workers have soured at Europe's biggest carmaker, which is struggling to raise profits amid stagnating emerging markets and low growth at home.

The cost-cutting target itself still stands, however, the sources said. VW and McKinsey declined to comment.

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MattDarringer - 8/8/2014 11:20:37 AM

-1 Boost

VW is a textbook example of how NOT to run an auto company. The union should be represented on the board but in no way should it have the power it does. VW in essence is in the hands of the union for every decision it makes.

That said, canceling unprofitable products and reducing or redefining overlapping products would raise profitability as would a modicum of attention to quality and reliability issues.

Agent009 - 8/8/2014 11:41:47 AM

+1 Boost

Part of that works council idea. The Union can tell the CEO what to do!

MattDarringer - 8/8/2014 11:46:58 AM

-1 Boost

@Agent009 all that does is kill the company. What responsibility do the workers have to VW's future? NONE.

VW will go bust rather than boom.

nguyenvuminh - 8/8/2014 11:59:19 AM

+3 Boost

I think we Americans don't have a good understanding of the role/contribution/detriment of "union" in Germany and Japan. It's quite different from the unions here in the US (from what I've read). If it's so detrimental, I would think that the likes of VW, MB, BMW, Siemens, Toyota, HOnda, etc. would have changed it by now. As a finance professional and one that have worked at 5 different companies in 4 different sectors, here in the US and in Asia, I will say that consultants are not as productive as they make themselves out to be. Their suggestions are short term in nature.

nguyenvuminh - 8/8/2014 12:00:35 PM

+3 Boost

Re: my post above, I'm not saying what the union is telling VW is entirely appropriate, I'm just saying that it's more complicated than what MattD seems to be saying.

MattDarringer - 8/8/2014 3:05:34 PM

-1 Boost

The union got in the way of getting the CrossBlue into Chattannoga and that product is still 2 years off.

Vette71 - 8/8/2014 1:41:45 PM

+2 Boost

VW is GM 20 years ago. Too many brands, running less profitable factories in order to pay union worker costs and not paying attention to quality issues. Matt is right; follow Fords example of "One VW world wide" but don't make the Ford mistake of getting rid of the premium brands. Done right those premium brands can throw off lots of profits. Speaking of profits, VW needs to give the workers a piece of the action with a profit sharing program and maybe some stock in the company. Make the drive for more profit a win win.

MattDarringer - 8/8/2014 3:08:52 PM

-2 Boost

Dumping Aston, Jaguar, and Land Rover kept Ford from going bankrupt and of the three brands only Aston and Land Rover have any merit. Jaguar is in deep trouble in the US market with dismal sales.

It really is a shame that Ford didn't have the foresight to suggest a merger with BMW. That would have been a win/win.