Wolfsburg in Germany owes its identity, economy and relevance to the automaker, which is facing a probe that is only getting wider after it cheated on emission tests. Without Volkswagen, the town would die like Detroit in the US
Nowhere is Volkswagen AG’s widening emissions scandal being felt more acutely than in Wolfsburg, the ultimate company town in Germany.
Here, a 100 miles west of Berlin, Volkswagen (VW) funds the university, runs the biggest museum and owns the local soccer club, which is competing against some of the best teams in the world in the Champions League.
“If you’d visualise traffic in and out of the city, it would look like a pulse and the heart is the VW plant,” cab driver Karsten Raabe says as he steers his Skoda by the sprawling complex, where hundreds of gleaming cars sit in parking lots and on the back of freight trains. “Without VW, this city and the entire region would die. We’d become a European Detroit,” which declared the biggest US municipal bankruptcy in 2013.
More than seven decades after the Nazis built Wolfsburg from scratch to make the original ‘people’s car,’ Volkswagen employs about 72,000 people in the city of 125,000. The company’s annual sales have quadrupled over the past two decades to Euro 202 billion ($225 billion). The boom has helped drive unemployment down to 4.9 per cent, well below the national average.
Even the main tourist attraction is a tribute to Volkswagen: Autostadt, a 28-hectare theme park with road-safety tracks and vintage cars that was completed in 2000 for about Euro 400 million. And then there are the 7.8 million VW-branded sausages that are made in Wolfsburg and sold nationwide each year.
On Tuesday at Saloniki, a wood-panelled tavern near the central station, six men heatedly debated Volkswagen’s admission that it cheated on US emission tests, sparking an investigation that has wiped about Euro 25 billion off the company’s market value.
“Black Monday for VW” read the front-page headline of the local newspaper sprawled on the bar in front of them.
The men discussed details such as how big the fines will be, how many jobs might be cut and what role was played by Chief Executive Officer Martin Winterkorn, who will get a chance to make his case before the executive committee of Volkswagen’s supervisory board on Wednesday.
“Volkswagen’s development affects our city in a special way,” Mayor Klaus Mohr, whose office is on a street named after automobile icon Ferdinand Porsche, said in a statement. “In the interest of the city, I hope the necessary clearing-up is done quickly and thoroughly.”
Pressure on the automaker is building. The US probe has widened, with Volkswagen setting aside Euro 6.5 billion in an initial assessment of potential costs after concluding 11 million vehicles are affected globally.
Germany’s government plans to send an investigative team to Wolfsburg this week to speak with officials and examine documents. Regulators from France, South Korea and Italy have also vowed to scrutinise the company’s vehicles.
Even in soccer, Volkswagen is stumbling. As key supervisory board members held an emergency meeting in a nearby community late on Tuesday, its club, VfL Wolfsburg, was thrashed 5-1 by Bayern Munich. A substitute player scored all five goals in the space of nine minutes in the second half.
The people on the street here appear to be holding their breath, hoping for the crisis to pass.
“Everyone knows someone who works at Volkswagen,” Ivonne Schuckert-Thiele said from behind the counter of a Wolfsburger Nachrichten newsstand and ticket outlet.
Those workers, for now, seem to be quietly rallying around their employer.
Three men and two woman, when asked about the scandal in different parts of the city, all politely declined to comment, saying with a smile or a shrug: “I work at Volkswagen.”
© Bloomberg
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