VW's combative labor chief to leave board in shake-up

HAMBURG -- Bernd Osterloh, who heads Volkswagen Group's powerful works council, is taking up a management position at the company's heavy truck unit Traton.

Osterloh, 64, will become Traton's personnel director on May 1, Traton said in a statement on Friday.

Osterloh is stepping down from all his roles at Volkswagen and will be replaced by deputy works council head Daniela Cavallo as soon as possible, the automaker's employee representatives said in a separate statement.

Cavallo will also take over Osterloh's functions on Volkswagen's supervisory board.

Osterloh has been a member of VW's supervisory board since 2005. Under Germany's system of corporate governance labor representatives make up half the board.

Osterloh's exit could weaken resistance to faster and more drastic restructuring at VW.

VW Group CEO Herbert Diess' most outspoken opponent is sidelined and "it's fair to say that it creates the opportunity to run VW in a more rational fashion," Bernstein analyst Arndt Ellinghorst wrote in a client note.

Osterloh's departure as labor leader marks the end of an era at VW. After training as a business administrator, he joined VW in 1977. He became works council chairman in 2005 and wielded substantial sway across the group.

Osterloh frequently clashed with top executives including Diess and pulled no punches in disputes over cutbacks with VW’s Porsche and Piech billionaire owner family.

Last year, he opposed an attempt by Diess to extend his contract as CEO as the automaker seeks to cut costs and free up resources to invest more in electric vehicles.

In a statement Diess said Osterloh had "constructively questioned the management and has thus helped time and again to find solutions that were in the company's best interests."

Traton CEO Matthias Gründler said Osterloh's "extensive experience in a globally positioned organization will have a positive impact on cooperation among our brands and partnerships."

Osterloh said his successor, Cavallo, "has done excellent work as my deputy for two and a half years."

The timing of Osterloh’s shift to a managerial role, which is not unusual for VW labor officials, still came as surprise after he previously signaled he might seek a new mandate as works council chief.

Bloomberg contributed to this report