Posted on 01/24/2006 9:06:58 AM PST by traumer
DaimlerChrysler to Eliminate 6,000 Jobs to Save Some $1.2B a Year, Make Company Leaner
BERLIN (AP) -- The automaker DaimlerChrysler AG said Tuesday that it would cut administrative staff by 20 percent worldwide over three years, dropping 6,000 jobs in order to save some $1.2 billion a year and make the company leaner and more profitable.
CEO Dieter Zetsche said the streamlining would boost growth and profits by removing layers of management and improving cooperation between its divisions, especially Mercedes and Chrysler. Some 60 percent of the jobs to be cut would be in Germany, he said.
"Our objective in taking these actions is to create a lean agile structure, with streamlined and stable processes that will unleash DaimlerChrysler's full potential," Zetsche said in a statement. "We're going to build on a strong product portfolio."
The cuts would amount to 30 percent at the management level and would cover areas such as accounting, auditing, personnel and strategic planning. The downsizing would cost the company around $2.4 billion in restructuring costs from 2006 to the end of 2008.
DaimlerChrysler shares gained more than 5 percent to 44.67 euros ($54.68) in Frankfurt trading. Its U.S. shares rose $2.46, or 4.7 percent, to $54.70 in morning trading on the New York Stock Exchange.
The plan envisions elimination of administrative jobs that duplicate work at the corporate and production level, the company said. Underlining its emphasis on a sharper focus on manufacturing functions, top management will leave the landmark office tower in the Moehringen district of Stuttgart and move to offices at the production facilities in the city's Untertuerkheim district in order to be physically closer to the assembly line.
The company's other headquarters will remain in Auburn Hills, Mich.
The DaimlerChrysler announcement came a day after Ford Motor Co., the second biggest U.S. automaker, said it was cutting up to 30,000 jobs and closing 14 facilities by 2012. Ford had previously indicated it was cutting about 4,000 salaried positions by the end of the quarter.
General Motors Corp., the world's biggest automaker, announced a restructuring plan in November that will shave its work force by 30,000 and close 12 North American facilities.
On Tuesday, Zetsche also promised closer cooperation between the Mercedes and Chrysler divisions, another step in the long process of integrating the company's German and American halves, combined by the merger of Daimler-Benz and Chrysler Corp. in 1998.
But Zetsche said the company would resort to clearly defined "project houses" combining engineering talent from different divisions. As examples he cited the company's current effort to develop what it calls the world's cleanest diesel technology, BlueTec, involving commercial vehicles, Mercedes and Chrysler, or Chrysler's use of Mercedes' rear-wheel drive expertise on its successful 300C model.
At the same time Zetsche vowed "a clear priority within this effort will continue to further strengthen brand identity" between the German and American brands.
Further changes announced Tuesday include the reorganization of oversight of its commercial vehicles division, saying that it would be renamed the truck group and subdivided into a North American division including its Freightliner, Sterling and Thomas Built lines, and a Europe-Latin America division including Mercedes-Benz trucks.
Meanwhile, financial results from the former commercial vehicles division bus and van businesses would now be reported separately.
In another move, the company said its research and development activities and Mercedes division vehicle development would be under the combined oversight of Thomas Weber, a member of the company's top management board.
The company noted that the management board itself has shrunk from 12 to nine members with already-announced changes including Zetsche's decision to combine his duties as top boss with running the company's Mercedes group. Zetsche headed the U.S. Chrysler division and then Mercedes before taking over the top job from Juergen Schrempp on Jan. 1.
*Very* interesting. Looks like they're cutting mostly German staff and that the Chrysler engineering division is getting stronger and more influential.
"Project houses"???
Sounds like DCX engineers are gonna hafta live in public housing.
One day after FORD.
What's this domino effect called in the stock market... ?
The Wall Street Journal had an article a few months ago about one of
the head managers of Chrysler. The guy was busy cutting useless stuff
(like the in-house media services).
IIRC, he said something like he'd rather make cuts when things were
going good...so less cuts would have to be made in down times.
Translation: We're borrowing a trick from Honda and forming teams using engineers and designers from different divisions to design a product. For example, the next E-class will be designed by some Mercedes and some Chrysler engineers, not just Mercedes engineers.
Mercedes used to build good cars... now they produce unreliable heaps of junk.
The merger was the worst thing that ever happened to them.
This isn't unusual, companies usually make announcements like this at around this time. And most of this can be dealt with through attrition.
Germany is going to take most of those job losses, which makes sense. DCX has been going this way for a while now - I've been waiting to hear that they were going to do something like this.
Mercedes is having some serious problems in Germany (hence the move to put the big execs in the factory complex), but in the US they're doing well now. It looks like it's going to be the Chrysler side of the house that's going to pull them through.
I've been hearing more and more stories like that coming out of DCX. They seem to have clueful management now. Add that to their dynamite product line and you've got success.
Mercedes quality was headed downhill before the merger. Case in point - the 1997 ML320 POS.
I think Daimler-Benz really disgraced its name.
If you believe Consumer Reports, and I do when it comes to reliability, you are absolutely right. For decades now Toyota, Honda and their various divisions have been rated right up at the top and that hasn't changed, but it used to be that the European automakers were ranked pretty highly too. Now they're right near the bottom, well below the US automakers.
Yeah, but that wasn't the only issue. Look up the BMW Nikasil issue.
The British suffered from quality and worker malaise from about 74-83, Detroit from 75-92 (longer in some makers' cases), but Germany has been exempt so far. I suspect that they're hitting that same problem, just delayed 30 years. They're having the same issues - overpaid workers not giving a flip about their jobs, quality control issues spiralling out of control - I suspect you know the cycle as well as I. The big difference now is that the Germans are moving operations out of Germany into the US and Eastern Europe and those lazy union workers are in for a surprise.
I worked for another of the large, German manufacturing companies on a new engineering project - let me fill you in on some of what I saw. Our project was being built for an American customer here in America, so much of the staff was American. However, every layer of management had a German and American in place - no American had sole management responsibility for a department.
The German engineers tended to be younger (willing to travel to the U.S. for their careers) and like everyone else, some were good, some average and others bad. Hired as the number two guy on the project, I knew my role and place and had no problems with my immediate leadership structure.
Where the real issues came up was on the Supplier Management side where there was extreme pressure to use German manufacturers or German "friends" in other countries. The only thing keeping our project from being 100% German was the Buy-America clause in the contract.
The other pressure I felt was the pressure to do something design wise that nobody else had done before. At first, I thought this would be a good thing, kind of cutting edge on steroids. But, after time, it became apparent that this "doing it first" thing was motivated more to get their names recognized then to build a quality product. Don't get me wrong, the product was of high quality (their pride would do nothing less), but their arrogance was another thing coming.
Meanwhile, I have a 1985 Jaguar XJ6 that's about to hit 300,000 miles with few problems. ;)
Anyway, here's an oversimplified nutshell description of the biggest problems with the German companies as I see it:
VW: Mexico. Bad idea. Stop making cars there. The Czechs in the Skoda works that VW owns make a much higher quality product.
BMW: Chris Bangle. Enough said. Also, iDrive is a joke - what idiot thought it was a good idea to run a car on WINDOWS???? Most problems with the new BMWs can be traced to one of these two sources. Note that the 3-series, without iDrive, appears to still be very trouble-free.
Mercedes: The C-class. What on EARTH possessed you to make a cheap econobox Mercedes? KOMAND is also a bad idea (though not as bad as iDrive) and the brake-by-wire system is just awful. Still good powertrain engineering, but what were you thinking with KOMAND???
Basically, BMW and Mercedes have tried to integrate their cars with a sort of in-car-network, and it's just not working out. That's probably part of your problems that you experienced.
Timing is everything. The perfect time to announce you are cutting 6,000 jobs is the day after Ford says it is cutting 30,000. You look like a relative hero instead of a nasty heartless business killing off communities.
Somebody over there is paying attention.
Um, where are you getting that idea from? Chrysler was under no government obligation or contract in 98. It was a publicly traded company, and the shareholders all approved the merger. There was no justification for the government to get involved. Chrysler's defense contracting days were long behind it - all sold off to General Dynamics.
Klinton, may he rot in hell, did many things, but he had nothing to do with this one. Unfortunately.
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