Porsche Casts Macht in 'Survival Mode' After Wiedeking's Ouster
July 24 (Bloomberg) -- Michael Macht, tapped to run PorscheSE’s operations after the sports-car maker ousted its chiefexecutive officer, spent 19 years as the company’s behind-the-scenes, go-to guy.
He championed Porsche’s lean production system to mirroradvances in Japan and boost profitability. He built a new Germanfactory that pioneered assembly of two models on one productionline. And when a gas explosion at the main plant shut it down,it was Macht who got the factory running again.
Now Macht, 48, takes over as Volkswagen AG swallowsPorsche, making it one of 10 brands. He needs to cut 10 billioneuros ($14.2 billion) in debt and keeps sales afloat as revenueplunges especially in the U.S., the carmaker’s biggest market.
“His priority is to survive the crisis and keep the shoprunning,” said Christoph Stuermer, an automotive analyst withIHS Global Insight in Frankfurt. “Porsche operationally ispretty much in survival mode right now.”
Wendelin Wiedeking announced yesterday he would step downas CEO after 16 years, paving the way for a combination of the911 sports-car maker with Volkswagen. Wiedeking, 56, opposedselling Porsche’s automotive unit to VW, Europe’s largestcarmaker.
Macht was named CEO of Porsche AG, the operating company,while there’s so far no successor for Porsche SE, the holdingcompany that will eventually be folded into Volkswagen. Porschedid not return calls from Bloomberg seeking comment from Macht.
Research Expertise
Macht joined Porsche in 1990, not long before Wiedekingcame to the carmaker, from a research institute where he focusedon helping German companies restructure and better organizetheir operations. Under Wiedeking, Macht got his chance to puthis concepts into practice.
When Wiedeking took control in 1993, Porsche posted a netloss of 122 million euros on sales of 978 million euros. Machtthat same year was chosen to run a new program set up tooptimize production by more closely linking suppliers to theprocess, according to one of Porsche’s Web sites.
A year later, he began running a newly formed subsidiarycalled Porsche Consulting, which focused on bringing productionmethods used by Toyota Motor Corp. to Porsche. Macht told theDetroit Free Press in 1999 that he brought in former Toyotaengineers to Porsche’s main factory, who swiftly helped himreshuffle the operations over the complaints of the factory’sGerman managers.
By the mid 1990s the carmaker was profitable again andMacht was rewarded for his role with a promotion to productionchief in 1998, where he remained until yesterday. Last year,Porsche’s profit was 6.29 billion euros, boosted by gains fromVW options, while sales reached 7.47 billion euros, comparedwith 113.8 billion euros at Volkswagen.
‘Quieter’ Style
“He definitely has a lot of insight from the productionside,” said Michael Punzet, an analyst with DZ Bank inFrankfurt who has a sell rating on Porsche shares. “As for hiscommunication style, he’s a bit quieter than Mr. Wiedeking.”
That nature may be exactly what Porsche needs to bring thebattle for control between Porsche and VW to an end, analystssaid. Porsche SE is Wolfsburg, Germany-based Volkswagen’sbiggest investor with a 51 percent stake accumulated in a four-year takeover attempt that ended in May as debt grew too large.
Volkswagen agreed yesterday to combine with Porsche andmake a Qatar fund VW’s third-largest investor. Qatar willreceive the 17 percent VW stake as part of a transaction withPorsche to take over options that can be converted into VWshares, a person familiar with the situation said. The PersianGulf state will at the same time provide a 750 million-euro loanto Porsche, said the person, who asked not to be named becausethe discussions are private.
Not Greasy
Stuermer, the Global Insight analyst, said Macht’sproduction experience is a good fit with VW CEO MartinWinterkorn because Macht is more of a process guy whileWinterkorn likes to gets “greasy” handling the technicaldetails of building a car. Macht in his career has focused onthe production methods used to assembly cars rather thanactually creating and designing them.
Macht oversaw the building earlier this decade of Porsche’sfactory in the eastern German city of Leipzig, where thecarmaker does final assembly of the Porsche Cayenne and Panameramodels. The vehicles are both built on the same assembly line,which Macht has said was a “logistical master stroke.”
Repair Specialist
Macht last year headed up a team appointed by Wiedeking torepair the main plant near Stuttgart that assembles the 911sports car after a gas explosion in the paint shop set off thesprinklers. Two workers were injured and treated at a localhospital in the blast which caused “several hundred thousandeuros” in damage to the factory, Porsche said at the time.
“It makes sense to have someone who is familiar with theday-to-day operations of the business to run the show,” MichaelTyndall, an analyst with Nomura Securities in London, said.“It’s going to be a hard task for him, though, on the one handto assure his workers, and on the other hand to appease his newboss.”
To contact the reporter on this story:Chad Thomas in Helsinki at cthomas16@bloomberg.net
Last Updated: July 24, 2009 04:19 EDTSource: Bloomberg
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