López' Warriors

The Departure

In 1993, José Ignacio López de Arriortúa came to Germany. The Basque had started a revolution at General Motors: he had made purchasing a strategic weapon. Now Ferdinand Piëch brought him to Volkswagen.

López brought his team — the "warriors," as they called themselves. Loyal buyers who followed his methods. GM sued VW for industrial espionage. The biggest business scandal in postwar history.

But the real scandal was different. López set something in motion that was necessary — and did it the wrong way.

The Ossified Germany Inc.

What López found was a system of comfort. The large German corporations and their suppliers had come to an arrangement. Long-standing relationships, stable prices, little competition. They knew each other. They helped each other. They didn't ask too many questions.

The "Deutschland AG" — a network of supervisory board mandates, house banks, and mutual holdings. Change was not foreseen. Innovation was annoying. The status quo was profitable — for those who were in.

This system had to be broken up. In that, López was right.

The Method

López's method was simple: Price pressure. Radical, systematic, merciless price pressure on suppliers.

New tenders every year. Lower target prices every year. Those who didn't play along were thrown out. Those who played along had to become more efficient — or die.

The suppliers learned quickly. They rationalized. They automated. They cut their own costs — often at the expense of their employees, their quality, their development departments.

Productivity rose. Prices fell. But where did the profits flow?

The Redistribution Machine

Here lies the core of the problem. López installed a machine for redistribution from bottom to top:

The Two Ruthless Ones

It could have gone differently. In the 90s, Germany had two ruthlessly assertive leaders in the automotive industry:

What was missing was a third — someone with the assertiveness of both, but with a constructive vision. Someone who didn't just ask "How do we cut costs?" or "How do we perfect the old?", but: "What could be?"

The Basque Irony

The bitterest irony: López was Basque. In the Basque Country, less than 200 kilometers from his birthplace, another model had existed for decades.

Mondragón — the world's largest cooperative. There, productivity gains stay with those who create them. No dinosaurs feeding. No shareholders skimming. The workers are the owners.

López knew Mondragón. Every Basque knows Mondragón. But he chose the other path — the path of plundering rather than cooperation.

The Collateral Damage

The machine tool builders, the suppliers, the small engineering offices — they all became victims of this redistribution. They created the real value. They developed the processes. They made the innovations.

And they came away empty-handed.

No capital for their own development. No margins for experiments. No resources to bring inventions from prototype to product. The Valley of Death became deeper.

When an inventor in Germany looks for a partner today, he finds starving medium-sized companies that can no longer take risks — and bloated corporations that no longer want to take risks.

The Two Blockades

In 1993, López installed the economic plundering. Two years later, in 1995, Prof. Erich Häußer, the former President of the German Patent Office, described the "cartel of ignorance" — the institutional blockade against inventors.

Two sides of the same coin. Together they strangled the German innovation system.

The Consequences

Germany was not overtaken from outside. It starved itself — by systematically cutting off those who create value from the fruits of their labor.

The López method became standard. Not just at VW — everywhere. Purchasing became the most important department. Price pressure became the core competency. Innovation became collateral damage.

Today Germany desperately searches for innovations. For startups. For the "next big thing." But the ecosystem that produces innovations was systematically destroyed.

You cannot plunder the value creators for decades and then expect them to keep creating value.

The Alternative

There would have been another way. López could have broken up Germany Inc. — not to redistribute profits upward, but to leave them with those who create them.

The Mondragón model has shown for 69 years that it works. Productivity through cooperation instead of exploitation. Innovation through participation instead of pressure. Stability through distributed ownership instead of concentrated power.

But this path would have meant really breaking the power of the dinosaurs — not just disturbing their comfort while shoveling more spoils toward them.

That's not what López came for. Piëch wasn't ready for that. Germany wasn't brave enough for that.

Conclusion

López left VW in 1996 under pressure from American lawsuits. Piëch died in 2019. Germany Inc. no longer exists — not because it was reformed, but because it was hollowed out.

What remains is an industrial landscape living off its substance. Corporations that no longer take risks. Suppliers that no longer have margins. Inventors that no longer find partners.

And an entire generation that has learned: Those who create value are punished. Those who skim are rewarded.

That is the true legacy of López' warriors.