Yesterday, we talked about the problems that Facebook is going through.

Volkswagen (VW), the world’s largest carmaker, has certainly had its share of difficulties in recent years, beginning with the emissions fraud (called “Dieselgate’) for which the company has, to date, paid out over $30 billion in reparations.

And those reckonings aren’t over, as the U.S. SEC filed suit last week.  The U.S. suit relates to bonds issued by the company at lower interest rates than would have been possible had the investors known of the pollution problems.  Regardless, the legal action was not a surprise to VW; the company warned in their annual report that they were subject to an SEC investigation.  And, the costs, whatever they may be, will be relatively small compared to the fees already paid out.  There have been actual, important benefits from all the difficulties, however.  The company has undergone real cultural transformation processes that were necessitated by the 2015 scandal – and these would not have been precipitated in any other way than out of necessity to counter the current culture at the time.  Because, at the time that the scandal broke, VW was riding high, touted as the best and most successful of car makers.  It’s said that the current change is “palpable, if frustratingly gradual” – but, that change it certainly is.  CEO Herbert Diess, who joined the company after the scandal broke, has been prominent in fomenting these changes, and, as a result, the VW stock has outperformed most of its fellow carmakers in recent months.  And, since the revelations that wiped out about 33 billion from the company’s market value within a period of two weeks in September, 2015, this new performance accomplishment is truly laudatory.  Volkswagen, being a staunch, old-line company with all the attributes thereof, would certainly not have made any of the recent changes had it not been forced to by the scandal that was of epic proportions and that swept the world, making obvious some of the more serious functioning deficits of the company’s organizational structure.  Thus, it’s said that while “barriers to change at Volkswagen remain immense,” the company would not have been anywhere near this far along in the change process without the diesel scandal.  It’s something akin to making lemonade from those lemons that turn up.  As part and parcel of that change, the company has said that it would accelerate development and production of electric vehicles, increasing the car maker’s bet on new technology to offset some slippage in profitability in both the China market as well as its core VW brand.  CEO Diess commented that the company wouldn’t be able to avoid layoffs as it ramps up its electrification focus, because production of an electric vehicle requires 30% less labor than that of combustion models.  And, thinking along the lines of the the continuing need for change at the company, I’d guess that the 30% of the labor force to be dismissed has already been determined – when layoffs must be made, it makes sense to advantage the company with the practice of laying off both the so-called “dead wood” – or nonperformers –  as well as those employees who are most reluctant to embrace change – the “nay-sayers.”   Across its brands, VZ sold 10.9 million vehicles world-wide last year, generating an annual revenue of 235.8 billion, a 3% increase from 2017.  The changes at VW are, to date, moving the company in the right direction.

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