海角大神

Volkswagen has been everything to machinist Lothar Herrmann 鈥� and to Germany鈥檚 global image as an engineering powerhouse.

Son of a carpenter and a butcher鈥檚 helper, Mr. Herrmann spent his childhood in Braunschweig in the shadow of the iconic carmaker鈥檚 factories 鈥� emblems of Germany鈥檚 postwar Wirtschaftswunder, or economic miracle.

When he was in his 20s, Mr. Herrmann was one of the fortunate few 鈥� a quarter of applicants 鈥� who made the grade to join the Volkswagen assembly line. And for the past 36 years, his initials have been stamped onto every brake disc or chassis he鈥檚 assembled 鈥� part of the company鈥檚 vaunted accountability practice.

鈥淢aybe pride is the wrong word, but I鈥檝e had positive feelings to look at a car and say, 鈥業t drives with my parts,鈥欌�� says Mr. Herrmann.

Three decades of that privileged factory work have given him and his family the perks of a stable, middle-class life: travel abroad, adventure motorcycle trips, a closet full of athleisurewear, a room-by-room renovation of his childhood home where he and his accountant wife now live. His tight unit of co-workers is 鈥渇amily鈥� with whom he鈥檚 raised children, played in soccer clubs, attended Christmas markets,and gone on professional development trips over the decades.

It鈥檚 an existential loss that he and thousands like him are contemplating 鈥� stunned that Volkswagen is for the first time in its 87-year history considering plant closures in Germany. The company has been caught off balance by a changing world. It got a late start in electric vehicle development, which has given the Chinese the upper hand. There鈥檚 declining demand for its products in Europe as cities push for mass transit. It has failed to stay fresh with design and innovation. Its export markets are getting more protectionist. And a new generation of consumers doesn鈥檛 see cars as status symbols.

The Volkswagen Group is still profitable, driven in part by subsidiaries such as Porsche and Audi that are coveted as luxury brands. But there are obstacles ahead for the flagship VW brand, which began as a Nazi economic gambit in the 1930s and later morphed into an engine for Germany鈥檚 rise after World War II.

鈥淲hen I think about it, my son has to work for another 50 years 鈥� and I don鈥檛 know if he鈥檒l be at Volkswagen鈥� for that long, says Mr. Herrmann, who five years ago helped his son secure a spot on the same brake assembly line where he started. 鈥淗e already told me that, had he started today, he wouldn鈥檛 do the training program at VW.鈥�

Volkswagen鈥檚 travails are symbolic of the nation鈥檚 overall economic malaise and a political crisis that collapsed the government in December, paving the way for early elections Feb. 23. For decades Germany has passed the buck on its future, relying on Russia for its energy needs and on exports to boost its manufacturing economy. It has underinvested in digital infrastructure; and the rigidity of its bureaucracy and labor markets and a demanding regulatory environment have left the nation vulnerable to global economic change.

Economic woes are particularly heartfelt in Germany when it comes to Volkswagen, a source of national identity, pride, and stability.

Just look at the German public鈥檚 collective shoulder shrug when top-flight conglomerates such as Bosch, ThyssenKrupp, and Siemens announced thousands of job cuts, says Thomas Puls, senior economist at the German Economic Institute.

鈥淥n the national level, you basically had no reaction,鈥� says Dr. Puls. 鈥淭hen Volkswagen came and said, 鈥榃e want to cancel the treaty which prohibits us from closing plants and laying off people鈥� 鈥� and suddenly everything exploded and the German public started screaming, 鈥極h no, oh no, now it鈥檚 over!鈥欌��

He adds, 鈥淰olkswagen is an icon of the recovery after the Second World War. ... And its golden age is essentially over 鈥� there鈥檚 a perfect storm in all relevant markets. The German car and automotive industry overslept. No longer can German industry save itself with strong exports or a focus on premium markets 鈥� we have to admit we have overcapacity.鈥�

Volkswagen employees sense signs of trouble

There was a time, not long ago, when Mr. Herrmann鈥檚 Volkswagen factory parking lot was filled with, well, Volkswagens. 鈥淵ou didn鈥檛 dare drive another car to work,鈥� he says.

Now, sitting at a caf茅 near his factory building mentally surveying the parked cars he passes on the way to the factory gate, he says there is a smattering of non-VW cars among the VW Golfs and Jettas, and the Audis and Porsches.

鈥淭here are Mercedes [made by Daimler], Korean cars like Kias and Hyundais, and everything else now,鈥� he says.

Signs of trouble, like this, have been noticeable. Anxious murmurs abound among workers over the fact that Volkswagen wants to reduce the number of trainees, or that applicants for factory work have hit new lows. When he started a three-year training program nearly four decades ago, Mr. Herrmann says, 4,000 applicants would vie for 1,000 spots.

鈥淏ack then it was difficult to get in 鈥� without connections, you would have never had a chance,鈥� says Mr. Herrmann, explaining his back door into the company. 鈥淔riends of my parents had told me, 鈥楽ee that you apply here.鈥欌��

Volkswagen could pick and choose among top high school graduates. Today it鈥檚 said that the company has had to lower standards to fill its trainee ranks. 鈥淭he top candidates will do the apprenticeship and then go back to school or university,鈥� Mr. Herrmann says.

Company culture is tenser than in his early years. People used to say what they thought about their work or their superiors, but trust has eroded among co-workers concerned about being reported to management, says Mr. Herrmann.

Still, he ventures his own blunt opinion about the cars themselves: 鈥淚 get the same quality now with the Koreans and the Japanese, and their software is better.鈥�

It鈥檚 a difficult admission, considering how deeply a blue-collar Volkswagen worker鈥檚 identity is tied up with high social status in Germany.

鈥淓ven in the 1950s, observers said that the Volkswagen workers鈥� demeanor corresponded to that of a city councilor or a government civil servant in terms of self-image,鈥� says Manfred Grieger, Volkswagen鈥檚 chief in-house historian through 2016.

Martin Bednarek started at Volkswagen 26 years ago installing vibration dampeners and now works in human resources. He says that his work has created deep connections with the region 鈥� the three factory towns of Wolfsburg, Braunschweig, and Salzgitter in which Volkswagen is the largest employer 鈥� and gives him social cachet.

鈥淚 have lots of friends who are doctors and architects ... and Volkswagen spills over when I talk about [my work],鈥� says Mr. Bednarek, whose home garage has reflected his career trajectory as he upgraded from Polo to Audi to Porsche 鈥� all Volkswagen brands.

Volkswagen began as a Nazi vision for an accessible 鈥減eople鈥檚 car鈥�

It was that sense of community that the Nazis originally wanted to capture back in 1937, when they launched Volkswagen to make an accessible 鈥減eople鈥檚 car.鈥�

Adolf Hitler wanted a vehicle that could transport five, travel efficiently, and be manufactured at a cost low enough that the average German could buy one.

Hitler failed, says Mr. Grieger, the former corporate historian. 鈥淎dolf Hitler saw himself as a genius, but the plan was far from reality.鈥� Though the National Socialists did not conquer the world, their Volkswagen concept 鈥� in the hands of a market economy and democratic government 鈥� eventually did.

The Nazis erected the first car factory in 1938 in the city now known as Wolfsburg and tapped engineer Ferdinand Porsche to design what later became the Beetle.

The plan had been to launch Volkswagen as a symbol of Nazi-led prosperity and technical advances. In reality, however, the town that they named 鈥淐ity of the Strength Through Joy Car,鈥� after one of their propaganda campaigns, ended up being a 鈥渟hantytown鈥� with facilities repurposed during the war for the production of 10,000 military vehicles, says Mr. Grieger.

The planned millions of cars never came to pass under Hitler, says Mr. Grieger. 鈥淭he utopian excess of the Nazis鈥� ideas only became reality in the growth years of the postwar period 鈥� it was the Allies who returned this factory to civilian production.鈥�

Indeed, it was under British control that a revived Volkswagen began producing large numbers of Beetles 鈥� the tiny, slow, but economical 鈥渂ug鈥� of the 鈥淭hink Small鈥� marketing juggernaut. It was the first import to challenge Detroit, and found favor with the American hippie counterculture.

Global sales of the Beetle helped fuel Germany鈥檚 mid-20th-century economic boom, as it became one of the bestselling cars in the world and cemented the country鈥檚 global status as an engineering powerhouse. The 1970s brought the ubiquitous Golf 鈥� one of the most successful car models in history just behind the Toyota Corolla 鈥� while later decades saw Volkswagen acquire luxury and sports cars including Bugatti and Lamborghini.

For the most part, profits flowed. The success might have made Volkswagen鈥檚 leaders 鈥渟elf-confident,鈥� says Mr. Grieger. 鈥淎nd this perhaps led vehicles to be developed in Germany in a way that鈥檚 ultimately more expensive than necessary.鈥�

Long reputed for highly trained and well-paid workers from the engineer to line worker, Volkswagen also prided itself on quality, using pricey hard foam where others used plastic, imposing strict quality control measures, and investing in innovation 鈥� which gave the industry air-cooled rear-mounted engines and direct-injection diesel technologies, among other advances.

Volkswagen鈥檚 strategic arc has not been without blemish: The company lost global market share to Japanese carmakers in the 1970s and later missed the SUV craze in the United States. In 2015鈥檚 鈥淒ieselgate鈥� scandal, Volkswagen was found to have faked the results of emissions tests.

In recent years, Chinese automakers have emerged as a potent threat. China, the largest car market in the world, has turned more protectionist, and its homegrown car company BYD, 鈥淏uild Your Dreams,鈥� outsold Volkswagen in China in 2023 for the first time. BYD moved 2.6 million units to VW鈥檚 2.3 million 鈥� its success fueled by small cheap vehicles named after nimble animals such as the Dolphin and Chinese dynasties like the Song.

Volkswagen has tried to develop its own batteries and proprietary software, but the expensive investments haven鈥檛 yet born fruit. Also, its efforts to do it all itself sapped time and resources. The company鈥檚 long-reputed precision and innovation was required to develop cars fueled by combustion engines, but might be overkill in the electric vehicle era, says Helmut Becker, an economic consultant and auto industry expert.

鈥淓specially when the Chinese are building them as computers on wheels,鈥� says Dr. Becker. 鈥淓lectric cars are basically so simple that everyone can do it. You don鈥檛 need special skills. Volkswagen鈥檚 mistake was that they abandoned [further development of] the combustion engine, and the electric Volkswagen is not there.鈥�

Economist Claudia Kemfert says she鈥檚 been forecasting trouble for at least a decade 鈥渂ecause Volkswagen isn鈥檛 innovative enough, and not fast enough with electric mobility, and then the diesel scandal,鈥� she says.

鈥淚t was only a matter of time until we saw an impact on the company,鈥� she adds. 鈥淚t will be a structural change 鈥� they cannot move forward with this high number of employees. German car manufacturing must make itself fit for the future 鈥� it鈥檚 healthier to go through this now than pass it on to the future.鈥�

Fractured confidence among Volkswagen employees

There may be a challenging transformation coming, but the organizations speaking for the workers 鈥� Volkswagen鈥檚 internal Works Council and IG Metall, one of the world鈥檚 most powerful labor unions 鈥� won鈥檛 go quietly. The union has promised 鈥渢he toughest collective bargaining battle Volkswagen has ever seen.鈥�

About 100,000 Volkswagen workers in Germany began walking off the job in November for a series of two-day strikes. Roughly a third of Volkswagen鈥檚 300,000 domestic workers are covered by collective bargaining agreements that have secured robust benefits such as 30-day annual leave, six-week sick leave, maternity and paternity benefits, and retirement pay.

They want more. IG Metall in the past has shown great savvy in negotiating high-profile deals that balance worker needs with those of the larger German auto industry. For example, its 2018 negotiations led to wage increases of more than 4% but also secured worker retraining in a bid to make Germany competitive in the transition to electric vehicles.

With Volkswagen profits falling in the past two years, the chasm between labor and management has widened. The union still wants pay hikes and has refused to accept factory closures and mass layoffs, while Volkswagen wants 10% pay cuts and plans to shutter at least three factories and lop head count by tens of thousands.

German autoworkers are just about the highest-paid factory employees in the world, meaning they have the most to lose on a global pay scale. Volkswagen factory worker salaries with benefits are roughly $67 an hour compared with their competitors in the U.S. at $44 per hour, says Dr. Becker. In China, autoworkers in Shanghai 鈥� among the most expensive labor markets in the country 鈥� earn salaries of just $6 an hour.

Add to that the fact that benefits are more generous in Germany: They include leave and training opportunities, and a social welfare environment that includes job protection and universal health care.

But trimming the workforce will not be enough, experts say. Massive transformation is needed. Volkswagen must invest in the right technologies and address headwinds that are reversing the trends of globalization, such as rising protectionism in countries formerly open to German imports, and flagging demand in markets including the U.S. and Europe.

Management and workers must find a consensus, says Mr. Grieger. But, he adds, 鈥淭here is no vision of what the company should be in 15 years鈥� time. That鈥檚 what鈥檚 holding both sides back. It should be about shaping the future and creating superior products that can meet people鈥檚 needs. We don鈥檛 have much of that 鈥� except for buzzwords like digitization, electrification, and mobility services.鈥�

Volkswagen is still profitable, but plans to close three plants

Before the strikes began, back in November, a few thousand still-hopeful workers gathered for a rally outside Volkswagen Arena in Wolfsburg 鈥� home to the original 1938 factory 鈥� eager to make their voices heard.

What happens to Volkswagen workers here is a litmus test for Germany鈥檚 commitment to social values and its ability to retool for a leaner, more innovative future.

If it鈥檚 overcapacity that needs to be dealt with, says union representative Mirko Hoffmeister, don鈥檛 start with the production line.

鈥淲e are not the most expensive component 鈥� that鈥檚 management,鈥� said Mr. Hoffmeister, nodding at workers filing off buses and gathering in front of a black stage. 鈥淚f in a bad year like 2023, Volkswagen management were among the top earners in Germany, then something is wrong.鈥�

The paper-cup coffee and sausages dipped in mustard gave the rally the feel of a backyard barbecue, and most workers chatted animatedly in small groups between speeches and a marching band performance. Yet the firecrackers and noisemakers could only thinly disguise the mood, matched by the chilly weather: Not everyone would survive.

Though the workers would fight, there seemed to be a tacit understanding that the economic headwinds might finally be too much for Volkswagen as a strange new era dawns for Germany.

鈥淲e鈥檙e still profitable, but it鈥檚 obviously scary when the board says we鈥檙e going to close three plants and carry out mass layoffs,鈥� says Mr. Bednarek, the optimistic human resources executive who started assembling vibration dampeners as a young man.

Yet in any transition there could be opportunity, suggests Mr. Bednarek: 鈥淚n the Salzgitter engine plant, you used to need maybe 200 employees on one line to build an engine from A to Z. Today you don鈥檛 need to put together the engines, but really only insert the battery.鈥�

Though there will be less demand for line workers, he points out, with the experience of a man who ponders head count all day, there will be opportunities for white-collar workers in digitalization, battery technology, industrial design, software development, and marketing.

鈥淚f you have the right qualifications, I think you can go very far at Volkswagen,鈥� says Mr. Bednarek.

Retraining might come too late for Mr. Herrmann, the Braunschweig machinist whose account of his three-year training stint in the 1980s paints a picture of a company with time 鈥� and resources 鈥� to do things right. He鈥檇 started by working on 鈥渟mall things鈥� such as swinging a hammer onto a metal sheet, before building vises to attach to workbenches by the end of the first year.

鈥淎nd it just went on until we finally got to the specialist departments,鈥� he says.

Today, Mr. Herrmann just hopes to hang on to his job until he can retire in five or six years. 鈥淚t might be tight,鈥� he predicts. 鈥淲e鈥檇 have to figure out how to survive.鈥�

Leon Kamali is young enough that he might be able to make the transition. The freshly minted secondary school graduate passed a slew of Volkswagen recruitment tests in 2024 and qualified for a logistics apprenticeship. Yet, notably, he鈥檚 more interested in the skills he is learning on the job than in the prospect of a long Volkswagen career.

鈥淚n the training, I鈥檝e learned a lot about logistics,鈥� he says. He expresses the priorities of a new generation of German worker: Loyalty to a company should only be as strong as the company鈥檚 loyalty to you.

Should Mr. Kamali lose his job, he鈥檒l go back to university and possibly return to Volkswagen 鈥� or a company like it 鈥� as an engineer or a designer.

Incidentally, he has not invested in buying a Volkswagen yet: He鈥檚 leasing.