End of the road (Photo by Sobottaullstein bild via Getty Images)

The three-piece band was doing its best to lift spirits with relentlessly upbeat pop songs and bursts of oompah music as rain plummeted down on a bleak autumnal day. A handful of people sat scattered at tables set up under an awning beside some food stalls and a small ferris wheel. Four middle-aged women swayed together in unison to the music, doing their best to bring the Oktoberfest vibe to their town, while a few other brave souls swigged pints of lager or munched on their sausages.
But it will take more than a few blasts of brass, bratwurst and pilsner to lift the storm clouds over Wolfsburg. For this prosperous place, about two hours’ drive west of Berlin, is a company town like few others, built from Nazi roots off the back of Volkswagen — “The People’s Car Company” which overcame its fascist birth to become the world’s highest-earning motor manufacturer. Now, however, it is in serious trouble as persistently sluggish management considers closing plants in their homeland for the first time in their history.
Such is the scale of this crisis — labelled an “earthquake” by the local paper — there are even mutterings this mighty car giant might emulate the high-speed crash of Nokia, the Finnish behemoth dismantled and sold within a few years of being the largest maker of mobile phones. Tensions are rising as the powerful IG Metall union, which just began another round of negotiations with managers, insists all German sites must remain open, even as there have been furious clashes with bosses at internal meetings. ’The situation is not good,” said one worker. “I am 54 so my working life is nearly over and I hope to get my pension in three years time but this is very, very worrying for Wolfsburg. I hope this plant will not shut.”
That kind of statement seems unimaginable in this city made by Volkswagen. Step out of the station and you see the world’s biggest car plant, three times the size of Monaco and where 70,000 employees churned out almost half a million vehicles last year. In front of you squats a futuristic science centre designed by Zaha Hadid, which serves as a sculptural reminder that this otherwise rather dour place has some of the highest average incomes in Europe thanks to cars. Even that bustling main shopping street is named after Ferdinand Porsche, creator of the iconic Beetle car and founder of a globally famous marque.
Almost half the workforce in Wolfsburg helps make cars, the highest proportion of any city in a country with 47 other places heavily dependent on this core industrial sector. “Volkswagen not only stands for economic prosperity, but also has a strong emotional component,” said the city’s mayor Dennis Weilmann. “Many families have relatives or acquaintances at VW and the majority of Wolfsburg residents have been driving a Volkswagen since their first car. Volkswagen also invests in many different areas of society, from art and culture to voluntary work and leisure events. It is therefore completely understandable that the current news is causing uncertainty among citizens.”
The city and car company have grown up together. Wolfsburg — twinned with Luton — was created in 1938 for one of Adolf Hitler’s pet projects: the mass production of cars for the people. It was originally named after the Kraft durch Freude Wagen (Strength Through Joy Car), and seen as a model Nazi town, only to be devastated by Allied bombs during the Second World War, after slave labourers were forced to manufacture rockets and military vehicles. Then, a British army major kickstarted production of the quirky and eventual global best-selling Beetle. Three generations later, the city is home to about 125,000 people with a university and football team — sponsored by VW, of course — that once won the Bundesliga.
Cars have come to symbolise nations ever since Henry Ford invented mass production. Think of the United States brimming with confidence in its post-war heyday — and you picture those huge Cadillacs with space-age tail wings. Italy has its gorgeous supercars and unreliable mass-produced motors. And the rollercoaster ride of Britain’s manufacturers reflected the economic and political zeitgeist in our own country. But in Germany the sector is a source of national pride, the key to an economy that showcases their consensual corporate model. As one top economist put it: “VW is the alpha male.”
So VW’s troubles after bungling the transition to electric vehicles are not just woeful for Wolfsburg. The sector powering Germany’s economic success for decades is struggling, exposing a national inertia at time of intense disruption and rapid technological change. As cars turn into computers on wheels, analysts fear the German giants are being left in the dust of faster-moving rivals from China and the United States. So there is sudden angst that all those beautifully-engineered marques, with their purring combustion engines, might soon look like expensive relics from another age — and fears that if the sector collapses, it will leave a large hole in the heart of the economy that props up the European Union.
And the consequences might not only be economic. Factory closures and job losses could easily push more voters into the arms of the populist parties thriving on both political extremes. Already, Alternative for Germany (AfD) is fighting against what it calls the “erroneous path to electro-mobility”, making opposition to EU plans to ban sales of petrol and diesel-powered cars a central part of its platform. Analysts suggest VW sites in Osnabrück, Lower Saxony, and Dresden, Saxony, are potential targets for closure — both regions where the AfD is building support.
The car industry accounts for about 1.8 million German jobs in total, 8% of annual economic output and 16% of exports. These are impressive figures. But Professor Marcel Fratzscher, president of the German Institute for Economic Research, says that simply looking at the data underplays its significance, since it has been a key driver over the decades of innovation, which spills over to benefit other parts of the economy. “The big concern is China, electric cars and automated vehicles.” he says. “[Volkswagen] were leaders but now they are lagging behind in electric vehicles. They have lost the technological leadership.”
Last year, China exported more cars than Germany for the first time. Germany is still the biggest car exporter to Britain, but Chinese imports such as cheap BYD eco-vehicles have risen tenfold in two years, while Elon Musk’s Tesla dominates the upper echelons of the electric market. Beijing’s latest data shows their production of new energy vehicles has soared by almost half over the past year. Meanwhile German makers also face a reversal of fortunes in the lucrative Chinese market that provided almost a third of their revenues last year — and this hit VW’s premium brands such as Porsche and Audi especially hard. The firm’s share in this market has fallen from 19% to 14% since 2020, as buyers shift from petrol and diesel-powered vehicles, while BMW last month blamed “ongoing muted demand” in China for cutting their profit forecasts.
Fratzscher is confident German manufacturers can reinvent themselves as they have in the past. “I am by and large optimistic because the skills that made German industry strong over the last 70 years — and especially the last 20 years — are still there,” he says. “Now they need to shift this innovation to new technologies — not just batteries but software, where VW is struggling badly. But they still have strong brands and distribution networks.” According to Fratzscher, then, “pessimism is over-done — although it depends, of course, how economic policy and geopolitics plays out. But taking a snapshot today of German industry, I would say it is pretty strong.”
But other experts disagree. In his forthcoming book Kaput: The End of the German Miracle, Wolfgang Münchau looks at how the nation slipped from technological innovators to sluggards due to blinkered attitudes, lack of investment and bad decision-making. He highlights the media prominence of an academic who argues schools should not use any digital content to underline their anachronistic attitudes. Then he tells the anecdote of a photographer who found it slower to send pictures on the internet to a printer 10 kilometres away than to travel there by horse. Such stories are familiar for anyone who spends time in Germany, as many football fans discovered to their surprise at the Euros this summer. Münchau polemically concludes that German car makers are like typewriter manufacturers, whose market was killed off swiftly by the arrival of desktop computers and cheap printers.
Reminding readers that VW sacked their chief executive, who tried to modernise the firm by focusing on electric cars, Münchau fears the problems may be existential for these car makers. “I am not predicting the German industry will disappear, but it will decline and no longer play the central role it does in the world and as a hub for German industry,” he tells me. He blames “oligopolistic groupthink and arrogance” along with a “lack of entrepreneurial dynamics” as the Germans fumble the problems confronting all legacy car producers, before going on to argue that the EU response of protective trade barriers against imported Chinese electric cars “is the playbook of how industries decline”.
VW must also navigate the nation’s consensual approach to labour relations that is currently also testing Tesla, which chose Germany over post-Brexit Britain as the location for its first European factory. Musk typically moaned about the red tape that delayed the opening of his plant near Berlin, while his employees created a works council against the wishes of their bosses. And the firm is reportedly warning staff that work practices and absenteeism levels must change if they are to continue in the country, attracting some criticism after managers were sent to the homes of workers on long-term sick leave.
Ultimately, the German car industry grew complacent, resisting the trend towards electric cars for too long. And once again, this sector symbolises wider issues in a society that became a corpulent victim of its own success — despite a reputation for taking the long-term approach. Its arrogance was shown by the emissions scandal, which led to huge fines and criminal charges, after VW’s cheating emerged in 2015. Then executives were slow to understand that electric cars are different products to traditional vehicles, ones that rely on powerful batteries and smart software rather than slick engines and smooth gear boxes. One economist in Berlin laughed as he told me how Tesla and Chinese firms update software constantly “but in Germany everyone thinks it is unbelievable that you can change cars through the air”.
Professor Andreas Knie, a specialist on transport and technology, believes the problem lies deep in Germany’s psyche, arguing that his country needs to transform its governance and corporate structures to embrace flexibility, failure and innovation. “We still believe we are the best footballers, the best soldiers, the best car makers — we don’t understand that the world is changing. Now in Germany we build the wrong cars. We are masters of hardware but not of software. We are losing market share dramatically. We will have 50% fewer jobs in the car industry in a decade.”
These are shattering predictions. And the problems are not unique to Germany: one in three European car factories is under-utilised. But Germany looks like an analogue country in a digital world. Knie fears that the cities dependent on the traditional car giants face a tough future. “Wolfsburg will be like Detroit — it will shrink very much. But so will other German car cities — even Stuttgart, the capital of the German car industry, will probably shrink,” he tells me. “It’s time to say goodbye to the car industry in Germany.” It seems ironic, but VW and Germany both seem to have forgotten Vorsprung durch Technik — that progress comes through technology.
Join the discussion
Join like minded readers that support our journalism by becoming a paid subscriber
To join the discussion in the comments, become a paid subscriber.
Join like minded readers that support our journalism, read unlimited articles and enjoy other subscriber-only benefits.
Subscribe“… a reminder that the policing of language is not a guarantor of social progress”. If I understand this comment correctly, I think the Emperor’s actions demonstrate the opposite: that manifest behaviour is more important than lurking attitudes in the psyche. In other words, instituting equality before the law makes the positive difference, not building windows into the soul through language policing, with the awful repressive atmosphere that results. The first is civil emancipation, the second is soft totalitarianism.
The abolition of the Habsburg monarchy remains one of the greatest sins of the 20th century
What more could they expect having been comprehensively defeated on the battlefield?
Vae victis! As “you know who” would have said.
Yes, winning wars is important for a country and it’s politicians and heads of state – as Mrs Thatcher demonstrated.
But not always fatal for a country as Germany has demonstrated.
However, to win wars, a country needs to be economically strong and the Hapsburg’s were running a country that was falling behind the others in the economic sphere.
They failed to embrace the industrial revolution, as had other countries.
Perhaps a lesson for Britain and Europe here, are we willing the embrace the new industrial revolution of computers, robots, and AI?
The signs are not encouraging.
Britain maybe. Europe probably not.
Industrie 4.0 is a German invention. When it comes to advanced manufacturing system (robotics, machine tooling, industrial automation, sensors, PLC) Germany is a world champion, UK is not a player.
Manufacturing systems, no. High end design and development, most definitely yes.
What does “high end design” means when ti comes to industrial manufacturing?
What do you mean by development?
How can Germany/Japan be so dominant if they don’t do development?
Had Franz Ferdinand not been assassinated there’s a chance that would’ve changed, or if Franz Josef had died earlier as it were.
You are wrong on the economic growth (industrialization) of AH. The country simply spent very little money on its defense. Military incompetence also contributed to the defeat. UK and France (certainly more industrialized) relied heavily on American industrial output (through American loans) to keep their war effort going.
“… are we willing the embrace the new industrial revolution of computers, robots, and AI?”
If you are talking about Industrie 4.0 (assuming it comes to pass) it is a German invention. Only 2 countries in the world dominate the world of advanced manufacturing Japan and Europe (mostly Germany).
You can bet your house that UK will not lead in the next step of industrial manufacturing.
‘We’ would have lost but for US loans.
Paul Warburg ( CoE-Fed) spotted this in early 1916, hence Balfour’s visit with the begging soon afterwards.
Astonishing that the greatest creditor nation on earth in 1914 could have been reduced to such abject penury a mere two years later!
Did we learn our lesson? Hell no, we were back again with the begging bowl in late 1940, this time in the trembling hands of WSC.
God bless the USA.
None of the largest companies in the world are manufacturing companies as you describe. Apple is larger than the entire net worth of the FTSE100, Amazone..and Tesla has come from nowhere to equal largest company in the world with Toyota.
Google and Apple, who have the maps and software, may well also become large car manufacturers as autonomous and semi autonomous vehicles start to play a larger and larger part in the evolution of *public* transport.
Perhaps, though as the author himself admits the winners weren’t really willing to consider letting the monarchy go until their hands themselves were forced. Horthy himself was an opportunistic douchebag.
Had Ludendorff cancelled his 1918 Spring Offensive, and instead gone on to the defensive, an old fashioned 18th century compromise Peace was quite possible.
In such a case the Dual Monarchy would almost certainly have survived.
Had Ludendorff cancelled his 1918 Spring Offensive, and instead gone on to the defensive, an old fashioned 18th century compromise Peace was quite possible.
In such a case the Dual Monarchy would almost certainly have survived.
The Japanese Emperor survived the 1945 debacle. The Norwegian, Danish, Belgian and Dutch monarchies all survived defeat.
The first was most peculiar and should have been hanged!
The others ultimately ended up on the winning side thanks to the munificence of the USA.
The first was most peculiar and should have been hanged!
The others ultimately ended up on the winning side thanks to the munificence of the USA.
And the Windsors have survived the post-conflict defeat and humiliation of Britain. So, no reason for them to have gone, but I suspect there is something in the Central European mindset that doesn’t do Constitutional figurehead monarchies.
Although the Poles may well feel it was poetic justice for what was done to their kingdom in the partitions under Austrian connivance.
“Franz Joseph occasionally made off-colour remarks about Jews in private”
I expect that Jews also made off-color jokes about Franz Josef, and many others, in private. Such as Hungarians, Czechs, Slovaks, . . .
How true!
Now the false god of “Nation State ” has crumbled (in all but fact), the metaphysical rises. In Anglo culture countries “The Crown” stands in for “Sissi” and Roman Catholics return to the Pope. A Franz Josef is infinitely preferable to a Karl Luger, as Queen or Prince Charles to Boris or Donald. There is clearly a great nostalgia for the pre-bourgeois nation state; and it is not necessarily reactionary.
Wonderful, provocative essay.
That is a bizarre over-statement. The Central European nationalists created facts on the ground even before the end of the Great War and created their successor states.
Nation states are by far the most important geopolitical actors today. The EU is weak, essentially because very few people actually offer their primary loyalty to it. Other supranational organisations such as the UN are even weaker. None acts even as a modest impediment to determined state action. Despite all the negative comments about Brexit, I don’t see Canada, India, Japan, Thailand or Brazil, in fact any other country, eager to form a political union with its neighbours.
Notwithstanding that, the Hapsburg Monarchy did indeed have many virtues. However its peoples had a long common history of half a millennium, and you can’t simply create artificial multinational entities with little common feeling in other cases. At least with competition between nations we can make comparisons; I never quite see why idealists rather blithely consider that a World government would necessarily be benign…..
“…you can’t simply create artificial multinational entities with little common feeling.”
My point was precisely that nation states are “artificial entities”, corporations created by bourgeois capitalism as the optimal socio-economic infrastructure for the practice of their specialty.
I agree..well put. The pervasive desire to constantly look back at the reality of historical cahoes to impose explanations and order, and then extrapolate these into the future is a mistake.
In 1990 while you can find futurologists predicting *many of the things we have now*..and indeed if you look hard enough find Leonardo and Nostradamus doing it, or many small children in all ages when they *what if we could…?*.
The fact is nobody really predicted the internet driven reality in which we live today…Facebook started in 2008, Uber, AirBnB etc even more recently..Google in the mid 1990s…. the disruption wehave seen in many industries and professions will continue, I expect Accountancy and Legal services to face enormous waves next…. the dominance in much Japanese and German advanced machine tools and robotics is real but fragile…these days every *edge* is real but fragile.
“It is very hard to hold a geographically extensive, transnational polity together even when it is blessed with time-honoured “legitimating structures of meaning”- faith, monarchy, civic ritual – as Austria-Hungary’s demise indicates”.
The Great Man Theory of History doesn’t have much traction amongst historians which I think is unfortunate because it seems to deny the contribution that the character, gifts and strengths of the individual makes in the course of events. First mooted by Thomas Carlyle in his lectures “On Heroes”1848, it was taken up by the 19th. century sociologist Max Weber. He adopted the word “charismatic” to encapsulate the strength of character, intensity of conviction, breadth of vision, personal attraction and rhetorical skills needed in leadership. The word charismatic comes from the Greek meaning gift, grace.
I’ve always been impressed how Frank-Joseph maintained his rule over a vast multinational empire often restless with nationalist aspiration and frequent failure militarily and politically. Not an obvious candidate for a Great Man of History prize and yet he remained in power for 68 years respected and loved by many of his subjects.I think he was charismatic in the sense that he manifested a strength of character and strong sense of duty which were important in his culture, and an ability to attract affection and loyalty.These qualities in addition to the “aura of sacral legitimacy”gave him great political advantage – truly gifted.
Great post let’s call FJ a Good Man.
There’s little evidence that, by the end of the 19th Century, loyalty to the Habsburg Monarchy transcended nationalist sentiment amongst ethnic Romanians, Slovaks etc. who bridled at Hungarian efforts to assimilate them. The Hungarians were alarmed at the prospect of becoming a minority within Hungary, but their assimilationist policies were a failure.
What the article stated was that nationalist sentiments among the ethnic minorities were more common among the politicians and intellectuals than among the masses.
This is borne out by the performance of the Austro-Hungarian Army in WWI. While some Czech regiments did defect to Russia, the rest of the minority dominant regiments continued to serve loyally. Had this been otherwise, the Army could not have fought for more than four years.
One of course, wonders how the nationalists would have fared, say in 1910, in the political environment of Romania and Serbia. After WWI, the Slovaks exchanged Hungarian domination for Czech and they disliked that almost, or as much as, their former condition. Presumably that is why we now have a Czech and a Slovak republic.
Hungarian assimilationist policies before WWI were indeed a failure, and worse, a mistake.
Thanks to you both for these points. You are in fact *both* right. Please see me separate comment above.
Correct sir. It took a world war that destroyed Russia, Germany to destroy AH. And it broke France too.
They were all “Romans”, inasmuch as the AH Empire was the political descendant of Byzantium.
Many thanks to commentators for their points. In response to Alex Baldwin and Stephen Pogany -you are quite right Hungary’s internal minority policies *were* a very, very, serious problem in the 1890s and 1900s.
This was actually something I included in an early draft . However it did not fit structurally / length wise. It is though something I hope to address in a later piece. It can be difficult to do full justice to all aspects of complex truth in one (word limited) article!
Thank you for continuing the historical debate in a constructive and courteous fashion.
I am most impressed by this analysis. If the author would provide me with his email address, I would like to email him a copy of my essay, “notes on Danubia”. Simon Weil
Shame that Conrad wanted a war so he could prove himself and then marry his already married paramour. Millions had to die for it. Alongside Wilhem’s withered arm and mother hatred and Nicky’s submissive relationship with his dominant wife it makes an interesting psychological study. No wonder Freud was Austrian. What an odd bunch. By contrast George was a dull but straightforward commonsense type. Anyone interested in this period must read Joseph Roth’s ‘The Radetsky March’. Again, a study in repressed odd behaviour. The Jewish Roth predicted what would happen to the Jews but managed to drink himself to death in Paris in 1939, thus escaping the concentration camps.
Well here’s an American chiming in.
Several years ago, I and my wife visited our daughter and her hubby in Papa, Hungary. He was serving as a pilot in the NATO airbase there. I like to tell people that the airbase at Papa, with nearby Esterhazy palace, was a NATO airbase that had formerly been . . . guess what. . . a Soviet airbase.
Nowadays over here in the US, I like to say . . . “Now that is progress!”
In our sojourns during that Hungarian visit, we traveled between Budapest, Prague and Vienna.
What a trip that was!
Between Nagy commemorations in Budapest and Jan Hus sculptures in Prague, we had the trip of a lifetime.
But the most memorable event of all happened near Vienna.
While visiting the Schonnbrun Palace, mentioned above, we signed up for a tour which included the room in which the ersatz would-have-been emperor Karl signed off on the demise of the Austro-Hungarian empire.
We were standing in the very room where the end of the Hapsburg legacy had happened!
I know not why. . . but that moment stands out in my memory as the most significant of all in our central European travels during that sojourn. . .
although there was another moment . . .
in a wine cellar in Vienna, when our tour guide spoke of a young musician from the German outback coming to the Hapsburg court in Vienna, a young composer from Bonn whose musicianship strived to emulate the Haydn and Mozart perfection of the Hapsburg Court . . . until an untamed French marauder named Napolean captured the imagination of Republican Europe and our tour guide in the Esterhazy wine cellar in Vienna asked if we had any questions and I said ‘What about Strauss?”
And she said, that waltzy stuff was considered the Dirty Dancing of that time!
Faluda, are you sort-of advocating a Single European Constitutional Hapsburg Monarchy at the end there? (If so, I’m loving it.)
Sissy had a fantastic villa in Corfu. It is open to visitors.
Another good argument against the supposed viability of the European Union.
We have heard that argument for the last 70 years. And yet here we are.
EU is not AH nor is Holy Roman Empire. It is just EU
Jako interesantan i zanimljiv tekst.A sama priÄa bi mogla poÄeti opet.
Some of the statements in Alexander’s post are contentious, and paint too rosy a picture of the Hapsburg Empire. However, to stick to the positive, extraterritorial national autonomy as a concept really developed under the Austro-Hungarian Empire, as is well described in Richard Pipes’s book “The Formation of the Soviet Union”. Developed by Austrian Socialists Karl Renner and Otto Bauer in the first decade of the 20th century, and commonly called the Austrian project, it allowed institutions to be defined by groups based on their nationality or identity rather than their country or region. The Jewish Bund in the Russian Empire was the first political party to recognize the usefulness of the concept, and began to give Yiddish a bigger role in its deliberations. Arguably extraterritorial national autonomy still offers scattered minority peoples all over the world their best hope of flourishing and avoiding assimilation.
Thank you for this Andrew. I appreciate the care and insight you have brought to this comment. Please see my seperate comment above for a mitigating explanation!