Michael Macht, Porsche

Shirley Redpath investigates the man behind the wheel

Born: 1960 Stuttgart, Germany
Education: Mechanical Engineering, Stuttgart 1986
Career:
1986 Joined Fraunhofer Institute for Industrial Engineering
1990 Porsche AG specialist for engine planning
1991 Head of the Work Organisation Department
1994 Porsche Consulting GmbH Managing Director
1998 Porsche AG Member of the Executive Board in Charge of Production and Logistics 2009 CEO of Porsche AG

In 1998, when Michael Macht was appointed designated member in charge of production on the executive board of Porsche AG, one of his first actions was to turn up on the assembly line floor and follow a 911 model moving through from initial parts to finished product. Throughout the day, he encouraged his fellow workers to open up to him. “I want to see the plant the way it really is,” he said. “I want to talk to you about your problems and hear what ideas you have.”

This interest in workers’ ideas is typical of his style, and may be one of the reasons why his controlling masters have allowed him to fill the newly empty chair of CEO. Volkswagen, the company’s new partner/owner, has a powerful works council, something the smaller Porsche facility avoided, and he will need to be able to integrate his operation into that new environment.

A graduate of Stuttgart with a degree in mechanical engineering, Macht joined Porsche in 1990 following four years working at an industrial engineering research institute. His early role was in engine planning, but he was quickly promoted to head the work organisation department.

During this time, the company was experiencing a sharp decline in its important US market, plunging it into heavy losses and raising the possibility of bankruptcy. Japanese automotive manufacturer, Toyota, offered the equivalent of €1.5bn for the privately owned business, but the family was unwilling to sell. Instead, they promoted the relatively unknown head of production, Wendelin Wiedeking, to lead a turnaround in the company’s fortunes.

Wiedeking had spotted Macht’s talents and put him in charge of a new program to link suppliers more closely to the production process. Macht, in turn, looked to Japan, and the company that had offered to buy Porsche, to learn the secrets of their production efficiency. “The crucial approach to the turnaround was realising that we had to make the value-creation process our top priority once again,” he said. “The essence was: production defines how the ideal value-creation process looks.”

Within the year, Macht was put in charge of Porsche Consulting GmbH, newly set up to bring the production methods used by Toyota to Porsche. With a combination of Wiedeking’s unorthodox and often abrasive methods, Macht’s more consultative approach and the objective input of consultants from Japan, the sports car company eventually shook off the entrenched practices of old school German management and transformed itself into one of the world’s most profitable carmakers. Porsche Consulting went on to make the know-how gained during this transformation available to external customers, including hospitals, airlines, shipyards, banks and road construction companies.

Then in 1998, Macht was invited onto the Porsche AG board as its production and logistics executive. He continued to apply Japanese thinking to streamlining the production process, with the 2002 opening of a €127m factory in Leipzig being one of his most notable achievements. The facility has been hailed as the most modern automotive factory to date, where two different models (the Gran Turismo and the Cayenne) roll off the same assembly line. “I know of no other factory anywhere in the world in which the principles of lean production have been as consistently implemented as here in Leipzig,” Macht told journalists at the opening.

Earlier this year a new Porsche line, the Panamera, also began production in Leipzig. Believing that the company should concentrate only on what it does well, Macht has contracted the logistics out to specialist providers. The system developed is so precise that parts are delivered just one hour before they are needed in the assembly process, reducing the need for expensive storage facilities and stock holdings.

But while Macht was improving the production processes at Porsche, Wiedeking was scheming to invest the accruing profits from his turnaround into acquiring control of the much larger German automotive icon, Volkswagen. It was a daring move, putting him right at the heart of a family rivalry (Porsche and Volkswagen are managed and owned in complex structures by different factions of the same family) that has gone on for two generations.

By 2005 he had acquired 30 percent of Volkswagen stock and was publicly talking about how he would introduce similar efficiency improvements to the larger company. Before he could acquire the final tranche of stock needed to give him full control earlier this year, however, the global financial meltdown had hit, the price of the shares went up and Porsche sales, particularly in that crucial US market, slumped once again. Porsche found itself with an estimated debt of €10bn, and instead of taking over Volkswagen, Porsche found itself the subject of a complex bailout by its rival.

Wiedeking is out and his protégé, Macht, has been given the top job, but analysts are forecasting a difficult road ahead. Immediately after the change had been announced this summer, industry observers were casting Macht as an “unimaginative technocrat”, compared to “emotional visionary” Wiedeking, and predicting that he “will be putty in [VW CEO] Piech’s hands”.

Certainly, the once proud independent marque will now become one of ten within the VW stable, leading many Posche fans to believe that its exclusivity and engineering excellence will be lost. For Macht, however, this is an opportunity to further streamline production costs and efficiencies through platform sharing with the rest of the group. He told journalists at Welt am Sonntag, “I am standing for integration instead of confrontation”. Hopefully he will be proved right.

As the company faces its second consecutive year of losses in the billions of Euros, he is aware that sales need to be accelerated without losing the caché of the brand. “If the world economy picks up again we can well imagine unit sales of 150,000 Porsche cars per year,” he said. “But we won’t achieve this with the four models that are existing today. Otherwise, we would have to significantly increase the number of cars of the current models. And then we would not be exclusive anymore. Therefore we have to think about new vehicles.” Work is well underway on several designs, including both hybrid and electric models.

Although speculation continues to circulate that Piech may just be biding his time before clearing out any residual whiff of Wiedeking’s reign, Macht is getting his head down and getting on with the job.

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