Sunday, April 19, 2015

The Death and Resurrection of the Volkswagen

Allied war planners reviewing aerial photography of their bombing raids on Volkswagen's Wolfsburg factory must have felt satisfied with their work.  The photographs revealed the complete destruction of a large central section of the factory and a pockmark of bomb craters across much of the rest. A damaged Lancaster bomber had even crashed through the roof 1944. Yet, the reality was quite different. Despite the visible devastation, production at Wolfsburg had barely been impacted. As the Allies bombing campaign became more intense during the war, the Germans were forced to reorganise their industries to cope. Post-war studies of the effectiveness of Allied strategic bombing revealed that German industrial capacity actually increased during the war and only collapsed at the end when Allied ground troops physically overran the factories and their transport lines.

At Wolfsburg, critical machinery, such as industrial presses, were distributed to surrounding villages and rural areas where they were safe from Allied bombing. The production lines were moved from the main hall to the vast factory basement, where it was protected by the reinforced concrete roof and floor. These changes inevitably slowed production, but production never stopped.

Production and vehicle repairs shop was moved to the vast reinforced basement during the war. British inspectors, used to small scale production facilities in the UK, thought that the basement was Volkswagen's main production floor.

Wolfsburg was situated in the geographical centre of Germany and with US and British troops advancing from the west and Soviet troops closing from the east, there was a great deal of anxiety at the factory about who would reach the town first. Due to the rumours about the destruction and vengeance wrought by the Soviets in the east, everyone hoped it would be Americans or British. The Porsches', along with their son-in-law, Anton Piech, and the senior management of Volkswagen opted to take no chances and fled to southern Bavaria, near the border with Austria. On 10 April 1945 US troops arrived and accepted the surrender of the virtually empty factory.

Hall 2 was flattened by bombing, but had never been fitted out and was largely used for storage.

The factory certainly looked worse for wear. In addition to the bomb damage, the factory’s forced labour force had run amok, smashing windows, setting fire to offices and vandalizing the machinery. Nevertheless, senior engineer, Rudolf Brormann maintained a cool head and saw an opportunity to keep the factory running. The exhausted US 9th Army had been in hot pursuit of retreating German forces for several weeks and their vehicles were in desperate need of maintenance and repair. Brormann made the factory’s maintenance services available to the army and offered to supply them with 110 brand new German kubelwagens that had yet to be dispatched. Brormann offered to build 1,000 more kubelwagens from available stocks of parts. A contract was signed and the US Army authorized the Reich Bank to advance Volkswagen RM1,350,000 to recommence production. Interestingly, all the kubelwagens were painted in the desert sand colour scheme of the Afrika Korps. When the Americans questioned why, given that the Afrika Korps had not existed since 1943, Brormann admitted that all no one had officially instructed them to paint them any other colour. The Americans accepted the new vehicles and quickly moved on.

US forces at Wolfsburg. The large rectangular building in the background is the power station.

On 26 May 1945,the Americans handed over the factory to the British Occupation Forces. No sooner had the British taken possession of the factory than specialists from the British automotive industry arrived on site to conduct an assessment. Over the next few years dozens of inspectors and technical committees from a wide range of countries would call at the factory.

This photo from the power station shows the gaping hole in Hall 1's roof. Beyond is the demolished Hall 2.

The Allies had agreed amongst themselves that Germany would be disarmed, its industrial capacity destroyed and factories closed and the country transformed into an agricultural society. All German technology and patents were to be expropriated by the victors. As a military facility the Volkswagen plant was designated to be dismantled and its assets distributed as reparations. Colonel Charles Radclyffe and Major Ivan Hirst of the Corps of Royal Electrical and Mechanical Engineers (who both had connections to the British motoring industry and were car enthusiasts) were tasked to secure the factory and supervise the liquidation of its assets. Upon first inspection they believed the factory to have been badly damaged and virtually worthless, but on closer inspection discovered that the damage they’d observed was either superficial or fake. In fact, to prevent the inspectors from stripping the factory, the workers and management had disguised its undamaged and fully functioning machinery with carefully placed rubble and rubbish.

A forlorn VW sits in Hall 1. It was this car that gave Ivan Hirst the idea to begin production of the civilian Volkswagen.

To keep the factory running Brormann offered Radclyffe and Hirst to build Volkswagens for the British in exchange for food and supplies. This placed Radclyffe and Hirst in a quandary. The British authorities had no desire to keep the Volkswagen plant running, but like the Americans they were facing an acute shortage of transport. As the British auto industry transitioned from military to civilian production, the supply of vehicles to the Occupation Forces dried up and the few vehicles that did make it over to the continent found the going particularly rough on Germany’s shattered roads. Inevitably the British team had commandeered the few Volkswagens on site for their own use and, despite their initial scepticism, they were soon won over by the cars’ robustness and reliability. Radclyffe and Hirst recognised that the Volkswagen offered a solution to the Occupation Forces vehicle shortage and signed an agreement with the factory management to build 20,000 cars for the British Occupation Authority.

The question at Volkswagen was now ‘what car to build?’ They had built military kubelwagens for the Americans from stocks of parts delivered in late 1944, but the Ambi-Budd karosseriewerkes in Berlin that manufactured the kubelwagen bodies had been leveled by Allied bombing. What little remained of their factory, including the panel presses for the kubelwagen and schwimmwagen had then been dismantled by Soviet engineering teams and shipped to the Soviet Union as reparations. The British made tentative inquiries with their Soviet counterparts about returning the presses but relations between the former Allies were already turning frosty and the Soviets dragged their feet.

British drivers and the first run of Volkswagens outside the Wolfsburg plant. These are military style VWs mounted on a kubelwagen high clearance chassis.

With no more kubelwagen bodies on hand, the factory was forced to use the civilian Volkswagen body. During the entire war only 600 civilian Volkswagens had been built, all for military use and most mounted on a kubelwagen chassis. Steel however was in short supply so panels were welded from steel offcuts, cannibalized panels from damaged vehicles and other random oddments and then hammered into shape by hand. As a result the first generation of post-war Volkswagens were of shockingly poor quality, broke down regularly and rusted rapidly. Many were destroyed in crashes due to the combination of poor brakes, dreadful roads and reckless drivers. However, the shortage of roadworthy vehicles meant even the most catastrophically damaged vehicles were dragged back to the factory and repaired or cannibalized for parts.

Nothing was wasted. Such was the scarcity of parts and steel that every damaged VW, regardless of its condition, was returned to Wolfsburg for repair.

The French Connection

As the first post war Volkswagens began rolling off the production line, the authorities in the neighbouring French Occupation Zone began to show particular interest. The French automobile industry had suffered from confiscations of plant, material and trained workers during the war years and French authorities were particularly keen to extract reparations from the Germans. The French Authorities presented Volkswagen’s British administrators with a demand for materials and machinery. To fulfill the demand would have shut down production, so the Hirst and Radclyffe made a counter-offer in the form of completed Volkswagens. The French were also suffering a shortage of transport so, although they found it distasteful, they agreed to take a consignment of Volkswagens in exchange. The trouble was that the British did not have a sufficient supply of steel to complete the order so they did a deal to use an allocation of steel earmarked for the French reconstruction to build the cars. It was an unorthodox approach but was typical of Ivan Hirst’s quick thinking expediency. The supply of French steel allowed the Volkswagen plant to begin production in earnest, and within a year, the Dutch Volkswagen agent Ben Pon placed the first commercial order with the company for Volkswagens.

The French weren’t only interested in Volkswagen’s plant and material, they also wanted Dr Ferdinand Porsche. The Porsche family had fled to Austria at the end of the war. Ferdinand Porsche had been interrogated by the Americans, but when the French requested he be handed over to them, they demurred. These maneuverings made the British authorities suspicious that the French intended to claim the Volkswagen plant for reparations. In fact this was exactly the French government’s intention.

If there was one thing the British motoring industry was certain of, it was that it did not want anything to do with Hitler’s ‘people’s car’, but even more so they didn’t want anyone else having it either – especially not the French! Hirst and Radclyffe were ordered to delay and disrupt the demands from the French authorities while London attempted to develop a coherent strategy.

Despite all their disparaging reviews of the Volkswagen, there was a begrudged recognition that the Volkswagen could provide suitable service in the far-flung corners of the Empire, where consumers were far less sophisticated. However, British manufacturers were counting on the Commonwealth export market for their post-war recovery.

Actually, within the hallowed halls in London the decision was cut and dried – the Volkswagen plant must be liquidated as soon as possible and instructions were sent to Berlin to finalise the inventory and commence liquidation. Radclyffe had since been promoted to a senior position in the British Occupation Authority, leaving Hirst in charge of the day to day running of Volkswagen. Radclyffe knew that liquidating Volkswagen was far more difficult that London realised and raised a series of concerns with London.

Firstly, the British Authorities had an unfulfilled contract with Volkswagen for the supply of 20,000 vehicles. He also pointed out that the French and Dutch had also placed orders with the company and had committed funds and resources. It would not be appropriate for the British to unilaterally cancel the contract and upset their Allies.

Radclyffe then questioned the social impact. The Volkswagen factory provided work for over 1,000 people. If the factory was closed what would be done with the workers, who would clearly become a burden on the over-stretched budget of the British zone? He also noted that Volkswagen’s electrical plant also provided both power and heating to the 100,000 residents in the nearby township of Wolfsburg. Did the liquidation order extend to the power plant?

Things were tough after the war. The grounds around the factory were used to grow crops.

Radclyffe’s questions were enough to stall London’s plans for the time being. Hirst still had his hands full though fending off demands from the representatives of British and continental companies who arrived at Wolfsburg with requisition orders for machinery and supplies. Hirst even resorted the trick Volkswagen management had pulled on himself when a delegation arrived at the factory demanding the release of Volkswagen’s main industrial press. While Hirst took the delegation on a long winded, circuitous tour of the facility, workers hastily covered the press with tarpaulins and piled it with rubble and debris. The visitors where then taken to view a pile of bomb damaged, broken machinery and invited to take anything they thought they could salvage. Inevitably of course, they declined the offer and left empty handed. Another trick Hirst employed was to take delegations on a tour of the facility in the factory’s sole surviving schwimmwagen, all the while plying them with liquor. At a certain point in the tour Hirst would lose control of the car and plunge off the roadway into the canal. These sort of larks invariably distracted the delegation from their purpose.

In December 1945 the French government invited Porsche to Paris, ostensibly to discuss licensing manufacture of a French Volkswagen. Ferdinand, Ferry and Anton Piech traveled to Paris but quickly found themselves in a political pressure cooker. The French government intended seizing the Volkswagen factory and moving it to France as reparations and they wanted Porsche’s patents. When Porsche stonewalled, the trio were arrested as war criminals. After four months imprisonment Ferry was released and hurried back to Stuttgart. To raise funds to secure his father’s release, Ferry began to promote a custom sportster that he’d been developing in Gmund. The first cars were entirely hand built from assorted VW parts in barn. Now Ferry moved the operation to Porsche’s Stuttgart workshop and started taking orders – with payment up front.

Ferry and Ferdinand Porsche with 356 number 1

While Ferry was busy founding Porsche, his father was engaged in a battle of wills with the French government and, surprisingly, Porsche was winning. In France, as in England, a ‘behind the scenes’ political storm was raging between the government and the auto industry. The government wanted to seize Volkswagen’s assets and begin its own nationalised car project, but the two majors of the French auto industry, Citroen and Renault, had ideas of their own.

Citroen and Renault had been eager observers of Germany’s Volkswagen project. Both companies realised that if successful, the German Volkswagen would come to dominate the European small car market and so they set about designing a suitable competitor. Citroen started work on their ‘very small car’ project that would eventually become the ubiquitous Citroen 2CV in 1936.

During the war years Citroen hid the prototypes and plans in rural France. After the war the car was developed as the 2CV.

Renault however did not make a start on their project until 1943. The Renault project, carried out in utmost secrecy right under the noses of their German overseers, was modeled on the Volkswagen itself (which Renault engineers had observed at the 1938 Berlin Auto Show) and would later become the Renault 4CV. Both companies realised that if the government’s Volkswagen project, it would be a direct threat to their business, so they began lobbying against the government’s plans. As the government was a major shareholder in both companies, they quickly realised the Volkswagen plan was against their own interests and shelved the idea.

The pressure on Porsche now relaxed, but he was not immediately released. The French authorities still wanted his technical expertise and he was only freed after begrudgingly agreeing to provide consultancy to Renault. By this time the development of the Renault 4CV was too far advanced for Porsche to have any real influence on its design, but did make a few unenthusiastic suggestions, which did little to endear him with his French counterparts. Finally, in August 1946, he was freed to return home. Interestingly, the French government have sealed the records of Porsche's case until  2047.

The mad scramble

Under Ivan Hirst’s management the Volkswagen plant slowly began to show promise. In 1945 1,785 cars trickled out of the factory. In 1946, 10,000. The company was no longer dependent on military contracts and was now fulfilling civilian orders, but the question of ownership of the company was never far away. With both British and French interests out of the picture, a range of suitors came courting. Henry Ford was offered the factory as compensation for damage incurred to the German Ford factory in Cologne. Henry Ford Junior quickly recognised that the Volkswagen was a sure fire winner in shattered post-war Europe, but his obstinate father, who seemed to delight in humiliating his son, rejected the offer.

The father of the Australian motoring industry, Sir Lawrence Hartnett, inspected the factory in 1947. Hartnett, who had been instrumental in establishing General-Motors Holden as Australia’s first true car manufacturer, had recently fallen out with General-Motors’ US management over their refusal to build a tough and cheap car for Australian conditions. Two Volkswagens had been sent to Australia for evaluation in 1945 and Hartnett recognised that the Volkswagen was exactly the type of car he had envisaged and he actively began lobbying the Australian government to accept the factory as reparations. Nevertheless, he too was thwarted by the very industry he had spent years developing.

Other countries now made offers, some serious, some opportunistic. The Soviets offered to purchase the factory and move it to East Germany. Finally, after more than a year of stalling, they returned Ambi-Budd’s kubelwagen and schwimmwagen body presses, but these were found to be so damaged and corroded as to be entirely useless. Then again, the time when these would have been useful had long passed.

Germany accepts the challenge

By 1949 the question of Volkswagen’s ownership was becoming urgent and, with no viable offers on the table, the British occupation authorities decided to turn the factory over to the Germans. But whom exactly? The company had been owned originally by the Nazi Labour Front and they no longer existed. After much debate, the decision was made to create a public share company. An allocation of shares went to the employees, to the State Bank of Saxony, who had funded the venture, and the state of Lower Saxony.

Radclyffe signs over the Volkswagen factory.

The company had been in German hands for some time. The British had originally installed a German lawyer Herman Munch as managing director in 1945, but he had proven incompetent. Hirst was defacto managing director and held out a hope that he would be formally offered the position. Unfortunately for Hirst, Volkswagen offered the position to a German, Heinz Nordfhoff. Nordhoff had been the managing director of GM-Opel’s truck division during the war and had consequently been banned, along with all Opel senior management, from holding any position in a GM company. He had originally hoped the ban would be short-lived and he would eventually be welcomed back to his beloved Opel, but Opel’s new American management dissuaded him (and others) that he could ever return. Despondent, he had bounced between the shattered remains of the German auto industry until he would up at Volkswagen. Before the war, Nordhoff had been a fierce critic of the Volkswagen and, even now, he could barely disguise his disgust for the ‘horrible’ little car. But in 1947 Volkswagen was virtually the only German car company that was actually functioning so he accepted the job. Over the next 20 years he would come to utterly dominate the company; both building the company into the automotive juggernaut it is today while simultaneously stifling its development.

VW workers 'celebrate' the 10,000th car with placards protesting the shortage of food and wages. Nordhoff's firm hand stamped out such troubles and gained his employees respect.

Hirst, who’d done so much to get Volkswagen onto its feet, was unceremoniously shown the door; an embarrassing reminder of the occupation period. He went on to work in the Foreign Office, but remained a passionate enthusiast for Volkswagen all his life.

Ivan Hirst and his personal VW.

Nordhoff now had the field to himself and he intended to make some changes, but that is another story…..

Volkswagen History 
Part 1 - Origin
Part 2 - War

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