::: Chapter Two :::
Volkswagen's uncertain beginnings
In 1976 the first Golf GTI's made their way onto Germany's roads. During 1978 a handful of U.K. buyers managed to secure left hand drive cars from Germany (22 GTI's according to Volkswagen's official sales figures) which continued to be available in either Diamond Silver or Mars Red to special order only, until June 1979. The Golf GTI was finally launched in right-hand drive to the U.K. market a month later, in July 1979. By the end of 1979 Volkswagen had sold 1573 Golf GTIs in the United Kingdom. World-wide sales figures had already passed 58,000 units by this point, and U.K. sales were late to catch on in comparison. This distinction was chiefly attributable to the long time period that elapsed between the European launch and the United Kingdom Launch. In hindsight however this delay served to fuel anticipation, and glowing reports of the new car's performance on the continent served to intensify the hype surrounding the UK launch.
Volkswagen had of course started off as one man's dream. In the Thirties, Adolf Hitler wanted to mobilise the German people, much as Henry Ford had done in America two decades earlier. 'Nothing' he said 'gives a nation greater prestige in the age of the motor-car than leadership in motor-racing'. To complement this vision Hitler promised to reduce the 'confiscatory car taxes', ease the stringent traffic laws and make it easier to obtain driving licences (Nelson 1967 p23). This regime was intended to encourage car ownership, the massive road-building scheme he had promised was underway, and Hitler could clearly see the potential propaganda value of a 'car for the people'. To realise his dream, Hitler approached Ferdinand Porsche, a brilliant Austrian Engineer of already enviable reputation to design his 'people's car', or 'Volks-Wagen' as it was later to become known.
Porsche saw the new chancellor as someone in a position of power who shared his enthusiasm for a well-made small car, who could help him realise his dream. Hitler liked the ideas Porsche outlined for his car, and between them, they finalised the car's specifications. The car was to use a rear mounted engine which would deliver power directly to the rear wheels. This would eliminate the power losses typical to lengthy drive shafts and improve traction to the driven wheels. It was to be air cooled to cut weight, prevent freezing or overheating and reduce costs, and it was to use Porsche's torsion bar suspension arrangement, with each wheel sprung independently to offset the car's short wheelbase.
Hitler was fond of the car. He had a dream that every German worker would own a car within ten years, and was set on seeing the car enter production. The Nazi party put pressure on the motor manufacturers to provide manufacturing capabilities for the car, but their hesitancy and stalling tactics angered Hitler. Their offer to manufacture the car upon receipt of a subsidy of 200 marks per car meant an outlay of 200 million marks for the intended production run. Hitler decided that this money would be better spent constructing a purpose built factory, where the state could manufacture as many cars as needed.
'The car manufacturers were very foolish' says Dr. Volkmar Köhler, the archivist of today's Volkswagen company. Had they been smarter they might have produced a cheap "people's car" for Hitler just as the radio manufacturers produced a "people's radio"…. Instead because they thought they could out-stall and out-fox Hitler, they ended up having the Volkswagen as competition (Ibid. p42).
A huge factory was created at Wolfsburg to build the Volkswagen, but war broke out before full production could start. Production at the plant during the war never rose higher than fifty-percent capacity and it was only partly converted to military production. That the plant was left tooled-up and ready for continued car production is often cited as an example of Hitler's belief that the war would be short-lived. The main output from the Wolfsburg plant during the war had been the 'Kübelwagen', the Nazi equivalent of the Allies' Jeep. It was essentially a re-bodied military 'Beetle', which along with its amphibious variant the 'Schwimmwagen' had earnt respect in Africa where they out performed heavier overheating British and American equivalents.
By the end of the war, most of the factory had been destroyed and the plant fell under British Control. The Royal Electrical and Mechanical Engineers (REME) set up a repair shop for British Army vehicles in the factory under Major Ivan Hirst. Placed in charge of the factory, Hirst's biggest worry was to prevent the plant being torn apart by the occupying allies. 'The Volkswagen factory had never existed as a commercial business. It was a political animal that belonged to the Nazis' explained Hirst ' So the Allies listed it as part of the war industry and said it must be dismantled or offered as reparations' (Wilman 1991 p20).
A lone beetle discovered in a corner of the factory was overhauled, sprayed khaki green, and demonstrated to the HQ 21 Army group. The reliability claims of Porsche's air-cooled flat four engine had been well substantiated in the harsh desert conditions of Africa and a resulting order came back to supply 20'000 cars at a production rate of 1000 cars a month. One of the first production Volkswagens was sent over to England with the suggestion that Britain take over the plant and produce the car for themselves. In Britain the enthusiasm of the military for the car was not however shared by the experts of the time. The car was described amongst other things as noisy, flimsy, and ugly. Lord Rootes, head of the mighty 'Rootes group', upon visiting the Wolfsburg plant, declared the Volkswagen concern to be nothing in which the British were interested, and went on to describe Major Hirst as a 'bloody fool'! (Ibid. p21).
During the following years, the plant faced many difficulties, not least in sourcing raw materials. By 1947 Wolfsburg were turning out 2,500 'Beetles' a month, but low worker morale symptomatic as much of Germany's poor economic climate as the conditions within the factory, was beginning to hamper production. Major Hirst knew that despite having produced almost 20,000 Volkswagens since the end of the war, the factory was reaching a low point. Almost every one of the increasingly well-made cars had gone to occupation forces and he knew that an experienced automotive executive was needed to help the factory reach the higher production figures it was easily capable of attaining. It was not enough to design a technically brilliant car; it had to be produced in sufficient numbers to become commercially successful.
The new era for Volkswagen started rather unceremoniously on the second of January 1948, with the arrival of Heinz Nordhoff. Having secured an agreement that from that point on, there would be no interference from any side in the running of Volkswagen, Nordhoff accepted the position at Volkswagen. One of his first managerial actions was to appoint Dr Karl Feuereissen. Despite material difficulties, the factory could manufacture cars, but there was no way to get these cars to potential consumers and no one to fix them if they developed faults. The achievements and efforts of this dedicated man form a significant part of the success of the Volkswagen company, and it was this early success that would enable Volkswagen to diversify at the end of the sixties…
Volkswagenwerk did not have a single dealer anywhere. It did not have a sales or service organisation within or outside Germany, had no parts depots, and no shipping or transportation network. The job of setting up a world-wide network from scratch was Feuereissen's. What eventually came out of his office was an incredible world-wide organisation which today encompasses thousands of dealerships world-wide and has made Volkswagen one of the largest exporters of cars in the world. It was also his task to begin Volkswagen advertising, sales promotion, product publicity and merchandising. His sudden and untimely death in 1955 was a huge loss to the expanding company. In his brief time at the company, Dr Karl Feuereissen established a distinct and recognisable Volkswagen style, a style which would later come to symbolise the company's excellent quality of production.
Soon after arriving at the plant, Nordhoff drove the car for the first time. He was impressed, far beyond his expectations, and with this realisation came a new enthusiasm for the job. By 1948, Germany was beginning to re-establish itself. American aid and the introduction of a new currency stabilised the economy and provided a basis for growth. Restrictions on industry were lifted and businesses were able to trade oncemore. Being the first German motor manufacturing company to be functioning fully so soon after the war, Volkswagen were able to sign up many dealers who before the war had handled different manufacturers. By 1948, Volkswagen had established the beginnings of a dealer/distributor network and were capitalising on their head start.
In 1949, Nordhoff instituted a policy of reporting completely and regularly to his entire workforce. It was an unusual policy for a manufacturing company in the west, especially one in Germany. It was however one he thought essential. Nordhoff had to obtain the complete trust and co-operation of his workforce, he would soon have to defer requests for wage increases, and his talk was frank and tough. He introduced a policy of meeting regularly every three months to address his 'fellow workers', spelling out to them the company's financial position and its immediate prospects. These meetings were supplemented by printed bulletins outlining news and undertakings.
Despite hardships and poor living conditions Nordhoff managed to instil in his workforce a sense of pride in their workmanship, and morale was high. The strict quality control procedures at work in the plant, and Nordhoff's insistence on honesty with the workers combined to greatly raise the distinction of Volkswagens output. Nordhoff realised the importance of a reputation for quality, and he strove to maintain the calibre of output at all times. One of the most important factors in Volkswagen's early development was Nordhoff's freeze on new recruitment. This policy enabled Volkswagen to re-invest heavily in tuning their production processes and pay their workers higher wages than anyone else in West German manufacturing. In the seventies, Nordhoff noted with pride that 'Volkswagen earnt every pfennig of its money through re-investments and sales' (Nelson 1967 p122). This same policy of re-investment was followed to a lesser extent through the whole of Germany during the fifties and contributed significantly to the German 'economic miracle'.
As money trickled in, the factory was repaired, expanded and re-organised. Nordhoff reshuffled machinery, and began to reconstruct the plant along the 'American Lines' envisaged by Ferdinand Porsche all those years earlier. Nordhoff resisted increasing pressure to change the design of the car as it became ever more apparent that Porsche's design had been carefully worked out to use the minimum of sheet metal. He decided the plant would concentrate instead on 'offering people an honest value, a product of the highest quality, with low original cost' (Ibid. p125). Nordhoff, often criticised for being a ceaseless optimist, did not question the future of Europe, as some of those around him were prone. He could sense a time when Europe would be prosperous as it had never been before and this Europe, he speculated, would need transport. Nordhoff vowed that the Volkswagen dealer network that was starting to take shape would 'provide the best service in the world', and the quality of this network, would complement the cars it served.
Part of the spirit that would make Volkswagen so powerful, was Nordhoff's ability to offset caution with what he would call 'taking calculated risks'. One such risk was the introduction of the Karmann-Ghia. In 1955 Nordhoff assigned Karmann the task of building bodies for the 'Ghia' designed 'Volkswagen in an Italian sports jacket' as it would soon be proclaimed. The cars were hand welded, hand sanded, and received the kind of intimate attention Wolfsburg was not able to provide the 'Beetle'. The risk paid off, and sales rose from 500 to 6000 a year. By 1961, sales were so good, and production had be so extensively simplified, that Nordhoff was able to pass these savings onto the customer by lowering the Karmann's price.
By the mid fifties, Volkswagen had become an efficiently functioning and rapidly growing company, whose contemporary distribution policies were proving their worth. Volkswagen had established a world-wide network of dealers and distributors, most of whom were devoted to selling Volkswagens exclusively. To complement these sales, they had set standards of service and customer care. They had devised ways of training mechanics, and sales personnel and had created a standardised and uniform appearance for Volkswagen showrooms and service centres, the legacy of which was in no small way responsible for Volkswagen's success with the GTI.