Mercedes to cut 8,500 jobs
Mercedes to cut 8,500 jobs
Carmaker says 8% trim in work force to come from early retirements, attrition in bid to boost profits.
By Christine Tierney / The Detroit News
After warning that Mercedes-Benz would have to do more with less, DaimlerChrysler AG said Wednesday it would cut 8,500 jobs, or 8 percent of the German premium carmaker's work force.
The job reductions, mostly through attrition, early retirements and other voluntary packages, will be carried out over the next year to help Mercedes achieve its goal to increase profits to 7 percent of sales.
"This decision to reduce our number of employees hasn't come easily," DaimlerChrysler labor relations director Guenther Fleig said in a conference call. "We are convinced, however, that we have created a basis for profitable growth."
Mercedes had been the DaimlerChrysler group's main breadwinner, but quality problems, growing competition and high costs have battered its results.
Mercedes also has been hobbled by years of losses at its Smart minicar brand and the cost of the new Maybach super-limousine brand.
In the first quarter, Mercedes reported a $1.2 billion loss, its first in 13 years, and its income slumped 98 percent in the second quarter to just $15 million.
When former Chrysler Group CEO Dieter Zetsche became head of the Mercedes Car Group on Sept. 1, he cautioned that costs were too high.
"The main challenge we're having at Mercedes is doing more with less -- becoming more efficient, and this is an area where we learned a lot on the Chrysler side in the last five years. It would be dumb if we didn't use the lessons learned where they apply on the Mercedes side," Zetsche told The Detroit News in an interview this week.
As CEO of the Chrysler Group, he cut 40,000 jobs at the Auburn Hills automaker during a turnaround effort.
DaimlerChrysler announced in July that Zetsche would succeed Juergen Schrempp as the next chief executive on Jan. 1. But Zetsche also expects to run Mercedes for a time.
DaimlerChrysler said the job reductions would cost the company $1.1 billion, and it would record the bulk of the charges in its fourth-quarter results.
"Slimming down the work force is just the first step," said Stephen Pope, head of equity research at Cantor Fitzgerald in London. "The workers will have to raise productivity and the reliability of the models will have to improve."
Mercedes' Sindelfingen factory, on the outskirts of Stuttgart, and the Bremen plant in northern Germany, will be the hardest-hit plants.
DaimlerChrysler said the cuts are within the bounds of a job-saving accord it struck with German unions in 2004.
Bloomberg News contributed to this report. You can reach Christine Tierney at (313) 222-1463 or ctierney@detnews.com
By Christine Tierney / The Detroit News
After warning that Mercedes-Benz would have to do more with less, DaimlerChrysler AG said Wednesday it would cut 8,500 jobs, or 8 percent of the German premium carmaker's work force.
The job reductions, mostly through attrition, early retirements and other voluntary packages, will be carried out over the next year to help Mercedes achieve its goal to increase profits to 7 percent of sales.
"This decision to reduce our number of employees hasn't come easily," DaimlerChrysler labor relations director Guenther Fleig said in a conference call. "We are convinced, however, that we have created a basis for profitable growth."
Mercedes had been the DaimlerChrysler group's main breadwinner, but quality problems, growing competition and high costs have battered its results.
Mercedes also has been hobbled by years of losses at its Smart minicar brand and the cost of the new Maybach super-limousine brand.
In the first quarter, Mercedes reported a $1.2 billion loss, its first in 13 years, and its income slumped 98 percent in the second quarter to just $15 million.
When former Chrysler Group CEO Dieter Zetsche became head of the Mercedes Car Group on Sept. 1, he cautioned that costs were too high.
"The main challenge we're having at Mercedes is doing more with less -- becoming more efficient, and this is an area where we learned a lot on the Chrysler side in the last five years. It would be dumb if we didn't use the lessons learned where they apply on the Mercedes side," Zetsche told The Detroit News in an interview this week.
As CEO of the Chrysler Group, he cut 40,000 jobs at the Auburn Hills automaker during a turnaround effort.
DaimlerChrysler announced in July that Zetsche would succeed Juergen Schrempp as the next chief executive on Jan. 1. But Zetsche also expects to run Mercedes for a time.
DaimlerChrysler said the job reductions would cost the company $1.1 billion, and it would record the bulk of the charges in its fourth-quarter results.
"Slimming down the work force is just the first step," said Stephen Pope, head of equity research at Cantor Fitzgerald in London. "The workers will have to raise productivity and the reliability of the models will have to improve."
Mercedes' Sindelfingen factory, on the outskirts of Stuttgart, and the Bremen plant in northern Germany, will be the hardest-hit plants.
DaimlerChrysler said the cuts are within the bounds of a job-saving accord it struck with German unions in 2004.
Bloomberg News contributed to this report. You can reach Christine Tierney at (313) 222-1463 or ctierney@detnews.com
