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Porsche Panache

For 50 Years, Germany's Preeminent Sports-Car has Created Noble Speedsters Built for Style, Mystique and Performance
Jonathan Kandell
From the Print Edition:
John F. Kennedy, Nov/Dec 98

(continued from page 2)

The younger generation of Porsches and Piëchs were permanently banned from management. Porsche was transformed into a publicly traded company. But all voting stock was kept in the family, divided equally between Porsches and Piëchs.

Feuding between the clan continued in the boardroom and soon became fodder for the media. When Porsche introduced its 928 model in 1977, Ferdinand Piëch badmouthed it to the magazine, Der Spiegel, and asserted it was overpriced. In 1991, when Ferry--despite Piëch resistance--backed the concept of an expensive, four-door Porsche sedan, drawings of the model were prematurely leaked to the trade magazines. After cries of heresy by automotive critics and many Porscheophiles ("A family car by the makers of the 911!"), the project was aborted.

The boardroom rivalries soon tumbled into the bedroom. Ferdinand Piëch had an affair with the wife of one of his cousins. The scandal grew when they lived together openly and had two children out of wedlock. It became a soap opera when Ferdinand married the kids' nanny.

Even if the family had managed to control their passions, Porsche A.G. would have found it difficult to maintain its superiority in the sports car world. The company reached its apex in 1986, when it sold 53,000 autos worldwide, including more than 30,000 in the United States. In part, this was the result of a very favorable exchange rate--almost three marks to a dollar--that made Porsche remarkably cheap, less than $20,000 for its lowest-priced model.

But then came the stock market crash of October 1987. In the next few years, Porsche sales tumbled, reaching a nadir in 1992-1993 when only 14,000 of its cars were bought, including an embarrassing 3,600 in the United States. Porsche managers reacted the same way they did to any glitch in the past. Emphasizing their cars' technological wizardry, they moved upmarket between 1989 and 1991, adding expensive improvements and accessories, discarding their cheapest models, and jacking up prices for other Porsches to between $45,000 and $100,000.

The strategy failed. Sports car enthusiasts, particularly those too young to have fallen under the sway of the Porsche mystique, figured that for considerably less money they could own a Japanese sports car of near-Porsche quality.

Wendelin Wiedeking faced steep odds when he was handed the reins of a very lame Porsche A.G. in 1993. Returning to the company after having cut his teeth there and then doing a short stint with an auto parts manufacturer, he spoke at the time of the need to massage Porsche egos by meeting with both sides of the family an equal number of times. "It's necessary to give them all an understanding of the actual situation so we can arrive at the right decisions for the company," he said then.

The actual situation was that major problems existed everywhere. "First, we had to redesign all our development, production and distribution systems," recalled Wiedeking recently. "And second, our car prices were too high." There would be no dividends for at least two years, Wiedeking informed the Porsche family. Meanwhile, Japanese consultants were hired to reorganize the factory floor and management structure of a company that for decades had been an icon of German industrial excellence. "Imagine, one day, strangers walk into a company like Porsche, take a stroll through the production plant, and tell you everything you are doing is pretty much off the mark," Wiedeking said at the time. "And they are not saying this in German or even English, but in Japanese. That's tough."

A visit to the Porsche factory five years later shows just how tough it was. The factory floor looks surprisingly less cluttered than it used to be. Assembly lines are shorter and simpler. Managers now talk of Japanese concepts like lean manufacturing, just-in-time manufacturing and zero-defect manufacturing. In practice, that means the labor force has been slashed, productivity has doubled and electronic monitors overhead let employees know how many more cars they must assemble to meet the target for their work shift.

With the Zuffenhausen plant running at full capacity, Porsche uses a service company in Finland to assemble part of its Boxster production. The underlying message to the trade unions is clear: if labor costs rise, Porsche--like Mercedes-Benz and BMW--is prepared to shift more production abroad. There are carrots as well. Bonuses are liberally handed out to workers who come up with money-saving suggestions in the assembly process. Top award--no real surprise, here--is the free use of a 911 Carrera for a year, with all maintenance and fuel bills footed by the company.

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