Istanbul, Dusseldorf, FrankfurtWhat had the strategists of Volkswagen not everything considered. They should find a location for a new plant, in a country with low wages and good sales opportunities. Hungary and Poland quickly dropped them off the list, wages were already too high there. Remained Romania, Serbia, Bulgaria and the Turkey,
Meanwhile, this choice has narrowed: Volkswagen plans to build its new car factory in Turkey, Although the vote was not yet final, it said in group circles. However, there is a preliminary decision to build the new factory in Turkey. Therefore, the decisive factor in the election is a number of factors.
The very first aspect is money. The government in Ankara is ready to provide a three-digit million amount of support for the construction of a new car factory, the Handelsblatt learned from informed sources. The favorite in Wolfsburg is a possible location in western Turkey near Izmir. A significant proportion of the planned investment costs of around 1.3 billion euros would be covered.
With such financial support Turkey can easily counter offers from Bulgaria. The government in Sofia is massively promoting the establishment of a new VW factory in their country. Two possible locations are in the final selection. “For Bulgaria, says that the state is part of the European Union and thus guarantees a certain legal certainty,” said a Volkswagen manager.
However, the talks with the respective governments have not yet been concluded. “Currently, negotiations are ongoing with sites in Bulgaria and Turkey“, Had Volkswagen CEO Herbert dies just a few days ago at an internal management event said. Since, however, a certain preliminary decision in favor of Turkey had already fallen.
This wants to keep the options open at first. The final decision will be made in the coming weeks. The Supervisory Board will also be involved. Before the summer break in the main Wolfsburg plant, which begins in mid-July, this should happen, said an insider Handelsblatt. This had been in the past week for talks in Turkey, was confirmed from business circles.
Volkswagen has built many new factories in recent years. These included sites in China whose government regularly violates democratic principles. The leadership of Volkswagen is used to delicate decisions. Nevertheless, many managers in Turkey are not well with their company in Turkey. “We do not know who we want to send forward when the Turkish president wants to come to the opening,” said a high-ranking executive.
Criticism versus subsidies
Because many European corporations are concerned about the controversial president Recep Tayyip Erdogan With investment in Turkey, the vote for the country could be exploited populistically, one manager told Handelsblatt. The Volkswagen Group has spoken intensely about the risk of an image loss. It would probably give criticism, but ultimately speak the framework conditions for Turkey.
How big the dilemma is shows up Stephan Weil, The Prime Minister of Lower Saxony and Supervisory Board of VW had to defend Turkey as a location. Addressed by journalists, he said recently that further economic integration between Germany and Turkey is positive.
He could not say anything about possible decisions. But: “Generally speaking, it would be positive if interstate relations were strengthened even in difficult times,” he said SPDPolitician on the sidelines of the Annual General Meeting in May. “Friends of Democracy in Turkey are asking us in this difficult time not to turn away from Turkey.”
Although Prime Minister Weil rejects a clear statement on the VW plans, he should be behind it. So if the proposal for the construction of a new plant in Turkey in the Supervisory Board is due to vote, then Niedersachsen should agree. VW boss Diess would have not only the second largest shareholder behind him, he would also have a major political actor by his side.
Wolfsburg also said that a possible investment decision for Turkey would be coordinated with the federal government in Berlin. Basically, there are no objections against the construction of a new car factory by Volkswagen. Such an investment could also have a positive effect on the political decision-makers in Turkey.
Head of state Erdogan was deliberately kept out of the negotiations. The reason: The President is in the election campaign since the beginning of the year. On Sunday, the important mayoral election was repeated in Istanbul. Negotiators reported that the location decision of VW should not be politicized.
Instead, two to three levels are negotiated under Erdogan for the largest single investment from Germany in Turkey for decades – especially with Arda Ermut, head of the Turkish investment agency. In a conversation with the Handelsblatt he admitted that Turkey had not made the best picture recently. “We have not sufficiently considered the concerns of German investors,” he said.
Erdogan could have exploited a decision by Volkswagen for or against Turkey in the election campaign, feared initiates. You absolutely wanted to prevent that. With success: Erdogan mentioned VW in the election campaign with not a single word. Erdogan’s participation in the VW negotiations was not commented on by the presidential office.
Works council involved
Politics is certainly the most sensitive topic in this location decision. For the fabric in the company, this is not the only decisive factor. It’s about investment, utilization of existing factories and jobs. The works council had therefore initially opposed the construction of a new plant in Eastern Europe, “In Germany alone, we have sufficient capacity to cover a higher demand,” said a representative of the employees.
This would be feasible, but Diess projected a reduction in costs. In Germany, he had said in a small circle, wages were simply too high.
In addition to labor costs and start-up financing for factory construction, another aspect speaks for the country on the Bosporus: Turkey is an important sales market for Volkswagen’s Passat model. “The Turkish government could also attract the fact that the Passat is used by many government agencies as a company car,” it said in addition to Wolfsburg.
That was an important argument for a Turkish location. The group did not want to comment on whether a preliminary decision has already been made. The options would be further examined, said a spokesman in Wolfsburg.
The importance of Turkey as a sales market has also changed recently PorscheBoss Oliver Blume voiced. Generally speaking, Turkey is a very large market with 80 million inhabitants and is important for Volkswagen in Europe. At the same time, the manager is responsible for production and thus for the new factory on the VW board. “Regardless of where we build a new plant, this is always a long-term decision for 30 to 40 years,” he added in an interview with Handelsblatt.
In the new plant could be mainly sedans of the group brands VW and Skoda be made. The leadership around CEO Diess would have preferred to build sporty SUV there, which works council boss Bernd Osterloh but should have rejected. He feared that the SUV models would then be exported to Central Europe on favorable terms. The parent plant in Wolfsburg and other German locations would have the disadvantage.
A first model should be the VW Passat. The current production site in Emden is to be completely converted to electric vehicles by 2022. This shows at the same time that the Skoda Superb would also be produced in Turkey. Both vehicles are based on the same platform and can be manufactured together more cost-effectively, it was said in Group circles.
Skoda is having a hard time making such a decision. The Superb, the largest model of the Group subsidiary, is something of a national icon for the brand on the Czech home market. However, Skoda also needs to grow – and needs new capacity. The annual sales of last 1.2 million should rise in the medium term to two million.
The responsibility for the new factory should lie with the Volkswagen brand. The Group Supervisory Board had already taken such a decision in May, according to reports from business circles. The original plan to transfer the line to Skoda was cashed.
Thus, the board soothed councilor Osterloh, who had threatened with a blockade. He had feared a transfer of models from the German plants to Eastern Europe. This risk was off the table, it said.
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