The Bosnian businessman who shut down VW in Europe

Emden, Germany — Nijaz Hastor began his career building Volkswagens in a factory in Slovenia. This month, he brought Volkswagen AG to its knees when he refused to back down on a contract dispute between the automaker and his diverse parts company.

The exact nature of the dispute remains murky. But the image of Hastor is not so murky anymore – he is the Bosnian businessman who has quietly created an auto parts empire with enough grit to push back Europe's biggest automaker customer.

Hastor, one of the richest men in Bosnia-Herzegovina, shut down his output of seat covers and iron transmission cases for Volkswagen rather than go along with the German giant's wishes. The company also produces plastic interior trim, but those operations were not part of the parts stoppage.

Without those parts, VW was forced to interrupt production at six of its European factories, making Golfs, Passats, engines, transmissions and chassis, idling nearly 28,000 Volkswagen workers and an uncounted number of workers at other supplier plants.

European media reported last week that Volkswagen had abruptly cancelled a major new contract with Hastor's parts company, Prevent DEV GmbH, leaving Hastor, 65, out of pocket to the tune of $66 million.

Other European news reports claimed Hastor recoiled from what some suppliers claim is an overly aggressive campaign in progress at Volkswagen to cut supply chain costs — an effort that some believe is motivated by the billions of dollars in fines and reparations VW faces from its global diesel emissions scandal.

Hastor made no official comment about his tiff with Volkswagen. He rarely appears in public, except for charity events and through his sponsorship of the Sarajevo Film Festival.

Prevent is a conglomeration of auto parts and other businesses. Two of his businesses — seating supplier Car Trim and transmission parts producer ES Automobilguss, both of Wolfsburg, Germany — were directly responsible for the standoff with VW. The German newspaper Sueddeutsche Zeitung quoted ES Automobilguss COO Alexander Gerstung saying, "The way in which VW is treating its suppliers is in no way acceptable and can ruin any small company."

Cascade of criticism

By 23 Aug, Volkswagen and Prevent had negotiated through their disagreement and resumed normal business. Details of the settlement were undisclosed. Sueddeutsche Zeitung reported that VW had agreed to pay $14.7 million of the disputed amount, according to its sources, and had agreed to continue buying Prevent parts for six years.

But now emerging from the smoke is the rare sight of a supplier that was unwilling to acquiesce to a powerful customer.

Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany, told the Bloomberg news service that Hastor's actions look like suicide.

"It will be difficult for them to compete in the next few years, at least with the same management," Bratzel speculated.

Another German publication said Hastor is being portrayed as a "greedy businessman" for putting his contract concerns ahead of the well-being of thousands of sidelined German workers. Stephan Weil, prime minister of Lower Saxony, criticized Hastor's confrontation with Volkswagen on German public radio. Prevent's tactics "must not be allowed to become common practice" in industrial disputes, as "it would cause considerable economic damage," Weil was quoted by Bloomberg as saying.

The state of Lower Saxony holds a 20 percent ownership interest in Volkswagen Group.

The German newspaper Bild quoted the head of Volkswagen's works council, Bernd Osterloh, further criticizing the standoff, saying, "The suppliers are playing a filthy game with us. It makes me furious."

David vs. Goliath

Press reaction in Bosnia-Herzegovina, where many of Hastor's holdings operate in Sarajevo, was more bemused. The press there characterized him as a modern-day David standing up to Volkswagen's Goliath.

Descriptions of his rise to auto industry fortune are sketchy. The German newspaper Freie Presse asserted that Hastor built his company "in secret." Even the media in Bosnia-Herzegovina last week admitted being in the dark about the man at the center of attention.

Hastor's subsidiary companies produce vehicle seat covers, seat structures, seat assemblies, plastic parts, metal parts and automotive cable. The company also produces furniture, including products for Ikea, women's clothing, luggage and luxury yacht interiors.

Hastor owns a second diversified company called ASA Group, with 20 other businesses in auto sales and rental, banking, insurance, shipping, organic farming and medical care.

According to reports last week, Hastor began his career in nonmetal parts production for a local automaking company called TAS — Tvornica Automobila Sarajevo — which built vehicles for Volkswagen. Hastor ended up controlling that business through a partnership with Volkswagen.

He began acquiring small auto parts companies in Slovenia in the 1990s, and combining them into a VW supplier group.

Bigger reach

In recent years, Hastor named his two sons, Kenan Hastor and Damir Hastor, as Prevent's operating executives while he pursued a more wide-ranging acquisition strategy. Prevent now has subsidiaries in 15 countries, including Germany, Austria, Romania, Spain, Brazil, Hungary and Turkey, employing more than 13,000 people.

Last week's flare-up was nothing new for Hastor. According to Bloomberg, Prevent earlier locked horns with Volkswagen in Brazil. According to news reports, Volkswagen had quality and late-delivery problems with Prevent in Brazil, and the supplier threatened to halt parts deliveries there. That standoff remains in negotiations.

Prevent also crossed swords with Daimler, according to the German news agency DPA. In that case, which is still in litigation in Germany, Prevent claims that Daimler canceled a seating contract, and as a result owes Prevent about $45 million.

Daimler declined to discuss the matter. But in an email to Automotive News Europe, Daimler wrote that the Prevent business units involved in the standoff at Volkswagen are not suppliers to current Mercedes-Benz models. Automotive News Europe is a sister publication of Plastics News.

The Daimler email said, "There are no difficulties of supply."