The scene is like a time from a Roy Andersson film. An endless corridor and blue and white walls. If it were not for the bright carpet – a classic head marker.
paws up on the eleventh floor, heading towards Leif Östlings small office furthest to the Volkswagen Group’s mighty line corridor in Wolfsburg. You control the nine directors directly over close to a million lives.
Scania former CEO Leif Ostling has a dilemma. He will save 1 billion, over 8.7 billion kronor a year for Volkswagen through synergies in Scania and MAN. He has three years left and the pressure is enormous – Volkswagen has made multi-billion investment in MAN and Scania.
The big question is who will be the losers, Scania Södertälje or MAN’s Munich? Company Financial MAN should draw the short straw. Success Company Scania ever made stable and high profits are further ahead in technology development and resort Södertälje should win. At the same time, MAN and the imposing headquarters of major Germany – with super strong unions and politicians who forcefully puts the lugs on the slopes as soon as someone breathing cuts.
Two people from Volkswagen’s PR department and Scania Communications meets SvD Business prior to our interview with Ostling, made in May. Leif Ostling has during his years as CEO of Scania totaling done hundreds of interviews all on their own – in Swedish. But now it’s more nerve wracking.
Leif Ostling comes in last. Taking a sip of coffee from the white cup and his blue eyes meet us without avoiding.
– My wife did not want to move here, she thought Wolfsburg seemed as Sandviken solid little bigger. So I commute weekly, he says, smiling.
It was cool talking.
The normally outspoken Ostling has during his 23 years as Head of Scania fought adamantly against mergers. “The only ones who profit from it’s competitors,” he usually is, and he ruled out merger with Scania AB Volvo in 1999 and with German MAN 2006.
on September 1 last year took Leif Ostling place in Volkswagen’s management team with basically a single mission: to find synergies between MAN and Scania.
It’s like put a älvräddare to develop a hydroelectric plant.
You’ve been against mergers?
– It was a hostile bid from MAN in 2006. Hostile bids will never be any good of, says Leif Ostling.
At MAN’s hostile bid on Scania, it was at least something very concrete case, namely Volkswagen bought in by nearly 30 percent in MAN to stop the hostile bid process from the inside. Suddenly Volkswagen dominant shareholder in both MAN and Scania – but that there was some deeper thought behind.
Volkswagen group elder Ferdinand Piëch tried to quickly connect and coordinate the grip companies, who in practice are mirror images of each other and thus have double sets of all. The 75-year-old Piëch went through himself in as president of MAN’s main board and appointed his closest, Volkswagen CEO Martin Winterkorn, Chairman of Scania. He also let Volkswagen become the majority shareholder in Scania in 2008 by purchasing Investor shares. Add to Piëch turned up the pressure by the increasing number of statements saying that there were synergies of around € 1 billion annually between MAN and Scania.
Everything was fixed for a brilliant coordination.
But in fact happened – nothing.
Leif Östlings posture blocked all attempts – all in the Volkswagen Group which set the standard for a development model that works deep into the research of their company while focusing strongly on to differentiate their brands, Skoda and Audi . A model that made the Volkswagen world leader.
Perhaps Leif Ostling have been sacked long ago – if he had not been a personal favorite of Piëch. “The world’s best business leaders” called Piëch Scania’s then CEO, in an interview SvD 2011.
But in the end, it was not longer.
On 4 May 2012 were sunny, but the AGM on Scaniarinken in Södertälje stormy. German newspapers had in spring speculated that Leif Ostling would be fired, and in his President’s speech at the meeting he did not mention the cooperation with MAN once.
Afterwards took the Barske Piëch him aside. He wanted to talk face to face.
They had known each other since the 1980s, when both sat in Swedish Volkswagen’s board, but it still seemed obvious what would happen.
But the then 67-year-old Leif Ostling was fired not – but was at work coordinating utility vehicles, as his business group called officially. He would get three years to prove that he was wrong.
It has been speculated that he was given an ultimatum: Get fired or take butcher job. But he does not want to talk about.
What gave Piëch up task where in Södertälje in May 2012?
– I have to explain in depth the differences between car operations and utility vehicles for Volkswagen, starting Leif Ostling.
It’s a remarkable statement – think about Atlas Copco’s president would say that he needs to start by booking a meeting with the owners of the Investor to explain how the engineering works.
Leif Ostling continues:
– I have three main tasks. Find an intelligent cooperation between MAN and Scania, look at Volkswagen’s South America Operations and how we can have common suppliers. But it takes time.
Ferdinand Piëch talking about synergies of EUR 1 billion. What do you say?
– There’s a good chance it. But not in the next few years. You will not be able to measure as accurately, but it’s mostly in research and development, says Ostling.
information to the market, it is more clearly expressed. From Volkswagen’s first quarterly report 2013, dated in April this year, it stands to read: “The objective is to achieve synergies of 200 million euros a year. We expect higher potential in the medium to long term. “
What does this mean concretely for the development departments of Scania and MAN?
– It means … (Pause). We have good examples where we have seen that Scania and MAN have gone to each other and learned from each other.
But you say huge savings potential is in research and development. Can you be more specific?
– We spend 5-6 percent of revenue per year. We spend 10 billion per year in the group. There’s simply the most to gain.
Ostling taking another sip of coffee. Looks completely unmoved. But perhaps alarm bells should ring for engineering unions in Sweden and Germany.
Should we be prepared to have fewer employees in research and development in Södertälje?
– No, I think this offers good opportunities, says Leif Ostling.
Södertälje has become Wolfsburg for Scania former CEO Lefi Ostling. Here is the Volkswagen Group’s management offices. And it is Ostling to ensure coordination between Scania and MAN conducted the VW Group’s satisfaction.
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