Thursday, September 06, 2007

It's official: Volkswagen is moving

Weeks of speculation has been confirmed when Volkswagen officially announced today that they will be moving their US operations' headquarters from Auburn Hills, Michigan to Herndon, Virginia. Aside from Volkswagen of America, Audi of America, Audi Financial Services, and Volkswagen Credit will all be packing their bags as well.

And while they're moving, Volkswagen will also be doing some restructuring. Currently, Volkswagen employs some 1,400 employees. They plan to reduce that number by eliminating 400 positions once they are established in Herndon. Another 400 positions will be moved to the Herndon HQ and new hires and contractors will fill up the remaining positions. The Auburn Hills operations will remain, however, but will only be a fraction of what it used to be. Only 300 positions and the same number of contractors will remain in Auburn Hills. Stefan Jacoby, newly appointed president of Volkswagen of America justified the restructuring as a way of having "fewer redundancies, less bureaucracy" while having "more creativity and more openness".

Stefan Jacoby, who assumes his position this month has worked out a five-pillar strategy for getting the US operations back to making money, focusing on product, brand positioning, dealer network, organization, and the possibility of manufacturing vehicles in the US suited for the US market. "A premium will be put on connecting more with customers," Jacoby said and added that more focus will be put on producing US-specific models in the future. With the Euro steadily growing stronger against the US dollar, Volkswagen has had to consider reopening a factory in the US after almost 30 years. No specific plans, however, were released along with this announcement.

This move can be considered a last-ditch effort. If this fails, then there's only one option left. Hopefully, this move instead fosters a renaissance for Volkswagen in North America.

Press release is after the jump.

Source: Volkswagen of America

AUBURN HILLS, MICH.— Volkswagen of America, Inc. today announced that as part of its new strategic direction, the Company will relocate its U.S. corporate headquarters to Virginia and also streamline and restructure its U.S. operations. The new business strategy will bring Volkswagen of America, with its brands, Volkswagen and Audi, closer to customers, increase competitiveness, and achieve sharper focus on key markets.


Volkswagen of America, which is a wholly owned subsidiary of Volkswagen AG, the world’s fourth largest automaker, will begin the transition from its current location in Auburn Hills, Michigan to Herndon, Virginia in April 2008. The new 185,000-square-foot facility is expected to be fully occupied by the end of 2008, and it will house the U.S. headquarters for Volkswagen of America, Inc. It will also include the U.S. headquarters for Audi of America, Inc., Audi Financial Services, Volkswagen Credit and other affiliated operations.


The Company’s total workforce at its current headquarters is roughly 1,400. Of these, 800 are full-time employees and 600 are contractors or employees of service providers are assigned to the Company. As a result of the relocation and realignment:


* Approximately 400 positions will be transferred to Northern Virginia (new headquarters)
* Positions at the new headquarters will be filled with employees who relocate, and new hires
* 300 full-time positions and 300 contractors or service providers will remain in Oakland County (current headquarters)
* Approximately 400 positions will be eliminated


“With these changes, Volkswagen of America drives the future,” said Stefan Jacoby, incoming President and CEO of Volkswagen of America. “It reflects a major new commitment to achieving our Company’s goals in the world’s largest car market. We are excited about moving our headquarters to Northern Virginia, where we will be closer to key markets and customers.”


Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen AG, added, “We are strongly focused on the U.S. market. This is a top priority for our Company, and we are confident that under Stefan’s leadership, we will continue to serve our current U.S. customers well and add many new customers.


“Our excitement is tempered by the fact that we need to reduce our workforce overall and by the realization that this does not come as good news in Michigan. However, we will remain a member of the Auburn Hills community, where we will continue to house certain key business activities and retain a workforce of approximately 600 people,” said Jacoby. “These changes are necessary to allow Volkswagen of America to meet the needs of our customers and remain competitive in the U.S. market. We must undertake an aggressive new direction in this market and these are critical first steps.”


Relocation
Volkswagen of America will add approximately 400 jobs to the Northern Virginia region.

“Volkswagen’s decision for Virginia is a strong affirmation of the Commonwealth’s business-friendly environment, location, market access and infrastructure,” said Governor Timothy Kaine. “The caliber of companies already located in the region and the proximity to Dulles International Airport were huge factors in the company’s decision."

Volkswagen of America received an attractive, comprehensive incentive program for the relocation that includes $6 million in cash-grants from Governor Kaine's office.


Restructuring
Volkswagen of America has already taken steps to reduce its workforce through attrition, early retirement offers, and voluntary separations. Further reductions will occur as a result of organizational realignment associated with the move. Additionally, approximately 600 employees and contractors will stay in Oakland County, Michigan, to support a variety of functions, including important financial and technical operations.

“We need fewer redundancies, less bureaucracy, more creativity, and more openness. Moving and streamlining our operations give us an opportunity to naturally transform the business so we can compete successfully in the U.S. market and better serve our customers,” added Jacoby. “We want to connect with our customers better, and these changes will help us do that.”


Strategic Direction
Jacoby was named Volkswagen of America President and CEO in June of this year, and takes up his responsibilities this month. His extensive experience with Volkswagen AG in global markets includes a prior assignment in the United States, as well as senior positions in the Controlling, and Sales and Marketing areas for Volkswagen. He was head of Controlling in Japan in the early 1990s, and had responsibility for the Asia-Pacific Region in the late ‘90s, where he was instrumental in bringing about the further expansion of two Volkswagen joint ventures in China. Most recently, Jacoby was executive vice president of the Volkswagen Group, responsible for sales and markets worldwide. Jacoby will reside in the United States and work from the Company’s new headquarters in Herndon.

Jacoby said he will implement a new strategy that includes five pillars: product, brand positioning, dealer network, organization and, ultimately, the possibility of local production. A premium will be put on connecting more with customers, and fostering a culture of fresh ideas and bold thinking. Additionally, the Company will focus efforts on producing more cars designed specifically with the U.S. market in mind.

“This move and new corporate strategy will benefit our employees, our dealers, and our customers. Market conditions and business strategy 30 years ago dictated we move to Michigan; today they dictate we move to Virginia,” said Jacoby. “With this move and with our new corporate strategy, Volkswagen of America drives the future.”


About Volkswagen of America, Inc.

Founded in 1955, Volkswagen of America, Inc. is headquartered in Auburn Hills, Michigan. It is a subsidiary of Volkswagen AG, headquartered in Wolfsburg, Germany. Volkswagen is one of the world's largest producers of passenger cars and Europe's largest automaker. Volkswagen sells the Rabbit,

New Beetle, New Beetle convertible, GTI, Jetta, GLI, Passat, Passat wagon, Eos, and Touareg through approximately 600 independent U.S. dealers. Visit Volkswagen of America online at vw.com.


About Audi of America

Audi of America, Inc. offers a line of luxury vehicles that include the Audi A3 sport compact; the sporty A4 sedan, Avant and Cabriolet models; the high performance S4 sedan, Avant and Cabriolet models; the high-revving RS 4 sports sedan and Cabriolet (November 2007 launch); the all-new S5 coupe (November 2007 launch) with 354 hp; the design-leading A6 sedan and Avant; the V10-powered high performance S6 sedan; the Audi Q7 performance SUV; the new all-aluminum Audi A8 and A8L; the new S8 with V10 power; the all-new 2008 TT Coupe and Roadster models; and the all-new all-aluminum R8, one of

the most exclusive mid-engine sports cars in the world. Information regarding the Audi brand and products can be found at audiusa.com.

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