The town that Volkswagen built is both resigned and defiant amid scandal
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Version 0 of 1. WOLFSBURG, Germany — The cornerstone of Adolf Hitler’s dream to bring affordable cars to the masses, this city emerged from the ashes of World War II by hitching its star to Volkswagen. A look back at Volkswagen’s history. Read the full story here. VW’s vast global headquarters, along with an auto plant so big it could fit Monaco under its roof, are the engines that drive this city of 125,000. Injected with VW cash, the local soccer team went from third rate to first tier. Thousands of residents live in apartments built by the auto giant. A $500 million Volkswagen theme park — think Disney meets Detroit — lures 2.2 million visitors a year. But in the wake of an emissions scandal that could cost Volkswagen billions of euros in fines and recalls, this company town is suddenly bracing for something that had become virtually unknown here in recent years: lean times. [EPA accuses VW of cheating on emissions tests] After the scandal broke last month, Wolfsburg City Hall — a 1950s behemoth on Porsche Street — declared a spending freeze, citing fears of a sharp decline in tax revenue, of which VW directly or indirectly accounts for more than half. Timing for a $70 million modern education center that would house a middle school and adult learning project under the same roof is now up in the air. Renovations and expansions of wellness, cultural and sports centers are on hold. Road projects are being reconsidered or delayed. Off years at VW have rippled through the Wolfsburg economy before, but analysts expect the hit from the emissions scandal to be unprecedented. Overall, the jolt could end up shaving a few tenths of a percentage point off growth in Europe’s largest economy. But no place will feel the downshift more than Wolfsburg. “There is a general consensus to take things a bit slower for a while,” Mayor Klaus Mohrs said. Suggesting a tough road ahead, a hiring freeze is already in effect at Volkswagen’s financial lending arm based in nearby Braunschweig. The Volkswagen Group — which owns a constellation of car brands including VW, Audi, Porsche, Seat, Bentley, Bugatti and Lamborghini — is cutting production at its massive engine plant a 37-minute drive southwest. On Tuesday, VW chief executive Matthias Müller warned employees of “pain” ahead for the company, saying that future investments would be “under scrutiny,” according to the Associated Press. On Thursday, VW’s U.S. chief will tell Congress that the carmaker is pulling diesel models from its 2016 lineup, according to his written testimony. It has all come as a shock in a town built on Das Auto. Privately, some residents now talk of a new sober mood that has led to the cancellation of dinner parties and hangs like a cloud over city businesses that depend on VW and its 64,000 local employees. “Everybody in Wolfsburg is worried,” said Antonio Viapiano, an Italian hairdresser who runs a salon near the VW plant. “Nobody knows what’s going to happen.” Founded by the Nazis, this industrial hub of sprawling factories — punctuated by a massive power plant bearing the VW logo — was never a looker. During World War II, its assembly lines, manned in part by forced laborers and initially meant to churn out the forerunner of the VW Beetle, produced military vehicles and armaments for the German war machine. After the Allied occupation of Germany, the city named after the Nazis’ Strength Through Joy social program was re-founded as Wolfsburg, taking its name from an ancient castle in the city. Today, it has the feel of an oversize office park, with drab postwar housing blocks radiating out from VW’s sprawling corporate complexes. But the city is proud. And with an economy that even in lean times is the envy of Europe, it is also fiercely loyal to the hand that feeds. Despite a scandal that could cost the city millions in lost tax revenue, most here are rallying to VW’s side. “It’s a fortress mentality now,” said Svante Evenburg, a Wolfsburg city councilor from the Pirate Party. “The first instinct is to protect VW, no matter what they did.” Take Britta Enders, who works on the VW paint-spray line here and said she went as far as printing T-shirts to sell to locals after the scandal broke. They are emblazoned with the slogan “VW — Trust in a Global Brand”; she said she has already sold 150. “I stand by VW,” she said, declining to be drawn into a discussion on the possible criminal activity at the company. “We are proud to work for VW.” The city is abuzz with rumors. Some swear that Volkswagen will suspend annual bonuses — not true, the company says. Even more insist that the scandal is nothing more than an American plot. [Volkswagen CEO quits amid emissions-cheating scandal] Indeed, since the U.S. government publicly charged VW with cheating on emissions tests, prompting a broader admission of guilt from the company that it installed software to cheat on such tests in 11 million cars worldwide, one impulse here has been to kill the messenger. A 38-year-old who test-drives cars for VW, and who declined to give his name, conceded that the scandal was “bad for the image of the city of Wolfsburg.” But he said he was also deeply suspicious of American motives at a time of rising competition from German automakers. “It is not a coincidence [that the Americans] are causing such a commotion now about the emissions levels,” he said. On a recent afternoon at the Leifert Bakery on Porsche Street, three local women were overheard chatting over coffee and cake. “Everybody is talking about Volkswagen these days,” complained one, who, in the fashion of many residents here, declined to give her name out of what appeared to be an unspoken code of VW loyalty coupled with a disdain for the news media. “I even saw an interview with an American lady on TV the other day.” A friend of hers harrumphed, “The Americans and their giant cars!” The third woman chimed in. “I bet nobody is testing those!” Indeed, die-hard VW customers in Germany appear equally as protective of the company as local residents. The most hard-core among them arrange with their local dealers to make pilgrimages to Wolfsburg, picking up their new vehicles from two 20-story automated car silos at the company’s futuristic Auto City. Outside the theme park — outfitted with an auto museum, a rugged driving course, car-inspired sculptures and one VW pavilion that still lauds the company’s dedication to cutting emissions — some VW customers indeed chided the company for its duplicity. But most, like 51-year-old electronic engineer Werner Faulhaber, who had just arrived from the Black Forest region of Germany to pick up his new VW diesel car, insisted that the scandal was overblown. “No people were endangered, as it would have been the case if air bags or ignition switches would have been broken,” he said. “Of course, it was not okay what happened, but the media hype is out of proportion.” A VW spokesman declined to comment. But officials at VW's Auto City said that thus far, there has been no drop in attendance. Evenburg, the city councilor from the renegade Pirate Party, is one of the few in Wolfsburg speaking out about VW's lapse in ethics. He said he hoped the scandal would unmask the “old white man culture at VW, where decisions are made from the top down, and the spirit of not tolerating failure makes others fear to go to their superiors to tell them certain things are going on that are not appropriate.” He said that Wolfsburg would now pay the price. “This is one of the biggest crises this city has faced,” he said. “We’re going to lose a lot of tax money from this.” Stephanie Kirchner contributed to this report. Read more: The real question: What will VW’s cheating scandal cost car owners? VW under fire amid EPA accusations it cheated on emissions tests Volkswagen CEO quits amid emissions-cheating scandal |