Volkswagen once almost killed its city. Until it has saved it by making it the richest city in one of the richest countries in the world. Meet Wolfsburg.
Wolfsburg was founded around the village of Fallersleben on 1 July 1938 as a home for workers producing the “KdF-Wagen” (VW Beetle) and was called “Stadt des KdF-Wagens bei Fallersleben”. Under British occupation after the Second World War, it was renamed Wolfsburg, after the nearby castle Wolfsburg. In 1951, Wolfsburg became its own urban district, got its own city hall in 1958 and gained the status of a major city with nearly 131,000 people when 20 localities were added to it in 1972. In 1973, it reached its highest population (135,000) and got its own university in 1988.
The crisis of the city and the company
In the 1990s, the city experienced several hardships with 19.3% unemployment rate (Willenbrock, 2002) – mostly low-skilled workforce – as a consequence of moving parts of Volkswagen’s production to Eastern Europe. Moreover, around 85% of jobs were in the Volkswagen Group and only 20% in the service sector (compared to 68% on the national level) (Willenbrock, 2002). Yearly, the city lost 200-300 million euros of purchasing power to the cities of Braunschweig, Berlin and Hannover. Population projections in the 1990s showed that the city would shrink by 45,000 to 80,000 inhabitants by 2012. On the scale of attractiveness for the establishment of new companies, Wolfsburg ranked 433 out of 441 cities (Willenbrock, 2002).
In parallel to the structural crisis of Wolfsburg in the 1990s, Volkswagen was experiencing a marketing crisis as many Japanese competitors significantly increased their market shares. In 1993, the company’s losses were one billion euros (Willenbrock, 2002).
Best birthday gift for Wolfsburg
Wolfsburg’s vision and development strategy was created in 1998, as a gift from Volkswagen AG for the city’s 60th birthday. With the help of McKinsey & Company consultants and the participation of city officials and economists, Volkswagen AG proposed the Auto Vision strategy which would turn around the course of events and transform the city into a mobility region with car developers, suppliers and research departments, but also a competence centre for the leisure and health industry (Willenbrock, 2004). The main idea of the strategy was to reduce the dependence of the town on the auto industry and generate new jobs. The concept of Auto Vision was radical and highly ambitious, for many also unachievable and dreamy (Willenbrock, 2004) and was adopted – as recalled by a former administrative employee (Willenbrock, 2004) – by local politicians only because they believed it would never be realised anyway.
Several joint initiatives between the Municipality of Wolfsburg and Volkswagen AG, most notably a joint venture, Wolfsburg AG, turned the course of events around and transformed the city into the richest city in Germany (DPA/The Local/jcw, 2013). Wolfsburg is today considered “the social laboratory of Germany”, while its mayor Schnellecke described their social activities as the “miracles of Wolfsburg” (Willenbrock, 2004).
In two years after 1999, 1890 new jobs were created in supplier companies, while in the next four years, 100 of Volkswagen’s suppliers already settled around the city creating 15,000 jobs (Willenbrock, 2004). Besides the jobs for low-skilled workers, several jobs for highly-educated workers have moved to Wolfsburg or have been created there – in Volkswagen’s development departments, Volkswagen’s suppliers, law firms, tax consultants and design agencies. In only a few years, the Innovation Campus Wolfsburg AG, another public-private initiate within Wolfsburg AG, has brought 126 companies with 673 workers to Wolfsburg (Willenbrock, 2002). Many of the newly established companies have settled in Forum Auto Vision, an office building with a floor space of cca. 27,000 m2, again operated by Wolfsburg AG. Moreover, an important actor in facilitating employment was PersonnelServiceAgency (PSA), a staffing and employment agency, a subsidiary of Wolfsburg AG, which provides monthly work to 3160 workers (Willenbrock, 2002).
Through Wolfsburg AG, new innovation programmes were started, partially inside and partially outside of Volkswagen’s corporate structure. In 2002, AutoUni, a proprietary institution of Volkswagen AG, was founded to offer academic training programmes for employees of the Volkswagen Group, while some programmes are also offered to the public. Moreover, AutoUni conducts research in various fields and supervises the doctoral programme of Volkswagen Aktiengesellschaft. In 2006, AutoUni moved to the 15-hectare-large MobileLifeCampus, built by Wolfsburg AG and designed by Henn Architekten (AutoUni, 2016). In 2014, the E-Campus, part of Volkswagen’s R&D department, was built and opened. The E-Campus is a 42,000 m2 electrical and electronic competence centre.
Outside of Volkswagen’s corporate structure, Wolfsburg AG has initiated several research-, innovation- and development activities. These are directed towards suppliers of Volkswagen that have recently moved to Wolfsburg, mainly for offering support for industry networking and research initiatives, providing business support to new start-ups, market research and facilitation of innovation, and construction and lease of (shared) office space and workshops (Wolfsburg AG, 2016). Through these activities, Volkswagen AG and Wolfsburg AG are creating an innovative milieu of suppliers, start-ups, innovators and their anchor, Volkswagen.
Marketing goes urban
To combat this crisis, the new president of the management board Ferdinand Piëch revolutionized the shopping experience, took over some competitors (SEAT, Škoda, Bentley, Lamborghini and Bugatti), renewed the model policy, and opened the luxury segment. All these activities had several implications on the built environment and the city of Wolfsburg in general.
With these changes, Wolfsburg became the showroom of Volkswagen and its brands (Audi, Bentley, Bugatti, Ducati, Lamborghini, MAN, Neoplan, Porsche, Scania, SEAT, Škoda Auto and Volkswagen Commercial Vehicles). Moreover, Wolfsburg became the embodiment of Volkswagen’s brand values (quality, security, social competence and environmental consciousness), their holistic approach, stability and innovative approach. The social restructuring of the city thus went hand in hand with restructuring and repositioning of Volkswagen’s brands on the market and resulted in the creation of Wolfsburg as a tourist destination.
In Wolfsburg, the repositioning of Volkswagen’s brands and transformation of Wolfsburg into a tourist destination can be observed on two scales: in the area around the Volkswagen plant and in the broader Wolfsburg area.
In 2000, on the former company junkyard, at the factory gates, Volkswagen AG commissioned 400 architects to design and built Autostadt, a 435-million-euros-worth and 28-hectare-large theme park/show complex (Nicola, 2015). The complex features a museum, pavilions for its main brands, a costomer centre, the factory, an exhibition on the evolution of roads, a cinema, two car storage towers, etc,., and is an enormous exercise in public relations and branding (Bekker, 2015). Autostadt attracts around 2 million visitors a year and is an example of post-modern architecture and interior design, and environment-aware landscaping.
In broader terms, Autostadt is part of the ErlebnisWelt, a comprehensive urban regeneration project, put forward by Wolfsburg AG (Höger, 2003/2004). ErlebnisWelt comprises of six distinctive zones: discovery and entertainment, sport and recreation, shopping and experience, art and culture, fun and fantasy, as well as tradition and modernity, which pervade the entire city in the long run. Through this, Wolfsburg was developed into a support environment for the “Volkswagen experience”. As part of the project, the Allerpark leisure park, the Volkswagen Arena football stadium, a ice hockey arena, a public swimming complex, a futuristic science museum by the architect Zaha Hadid, an indoor ski area, a hotel resort with 1000 beds, an outdoor circus and the centrally-located shopping centre, City Gallery were built. In 2003, when the 5th generation of the Volkswagen Golf was launched, the city of Wolfsburg renamed itself into Golfsburg for more than a month.
No taxpayers’ money spent
Besides activities focused on ensuring the employment of citizens, Wolfsburg AG is involved in the provisions of education (Gewerbeakademie Wolfsburg – Wolfsburg Commercial Academy, and Neue Schule Wolfsburg – Wolfsburg New School), energy (Wolfsburger Energieagentur – Wolfsburg Energy Agency) and healthcare, nutritional and exercise advice, health courses (in cooperation with several partners), provision of leisure activities (the leisure and recreation park Allerpark, a water-ski centre, high-ropes course, the SoccaFive Arena, ExperienceRegion 2020, etc.), and one of the main real estate developers (Wolfsburg AG, 2016).
Wolfsburg AG is one of the main real estate developers in the city and mostly constructs and manages buildings for their own programmes: the Allerpark recreation area, Volkswagen Arena, the ice hockey stadium, the public swimming complex, the Forum Auto Vision co-office space, the InnovationCampus co-office space, the WerkStatt co-workshops and other 16 commercial and industrial parks (Wolfsburg AG, 2016).
These social activities however do not come at the expense of either Volkswagen AG or Wolfsburg – they are mostly financed by staffing and employment agency PersonnelServiceAgency (PSA) that is part of Wolfsburg AG (Harth et al., 2000) and by companies that use their services (e.g. preparing workers for work abroad, healthcare packages, training programmes, etc.). This enables Wolfsburg to be almost without any debt. Which is quite an accomplishment these days.
AutoUni (2016) AutoUni. Available at: http://www.autouni.de (Accessed 19 March 2016).
Bekker, H. (2015) Visit Volkswagen Autostadt in Wolfsburg. Available at: http://www.european-traveler.com/germany/visit-volkswagen-autostadt-in-wolfsburg/ (Accessed 19. March 2016).
DPA/The Local/jcw (2013) ‘Germany’s Motown is country’s richest city’. The Local.
Harth, A., Herlyn, U., Scheller, G. and Tessin, W. (2000) Wolfsburg: Stadt am Wendepunkt: Eine dritte soziologische Untersuchung. Opladen: Leske und Budrich.
Höger, K. (2003/2004) ‘Brandhubs: Calalysts of responsive urban design’. In: Christiaanse, K. et al. eds. Entwurf und Strategie im urbanen Raum: Die Programmlose Stadt, Textsammlung zur Vorlesungreihe Studienjahr 2003/04.
Nicola, S. (2015) ‘European Detroit’ Fear Grips VW Company Town as Scandal Widens. Available at: http://www.bloomberg.com/news/articles/2015-09-23/-european-detroit-fear-grips-vw-company-town-as-scandal-widens (Accessed 19 March 2016).
Willenbrock, H. (2002) ‘Wolfsburg, wir haben ein Problem.’ Mck Wissen, 01/0.
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Wolfsburg AG (2016) Wolfsburg AG. Available at: http://www.wolfsburg-ag.com (Accessed 19 March 2016).