Mercedes-Benz parent plans thousands of job cuts to reduce spending by $1.5 bn2 min read . Updated: 29 Nov 2019, 04:52 PM IST
- Daimler AG plans to eliminate thousands of jobs worldwide to revive profit margins squeezed by heavy investments
- Early-retirement programs, buyouts to reduce headcount by 2022
Daimler AG plans to eliminate thousands of jobs worldwide to revive profit margins squeezed by heavy investments in electric and self-driving vehicles, following on the heels of rivals BMW AG and Volkswagen AG’s Audi division in mapping out cost savings.
The job cuts will be carried out by the end of 2022 as part of efforts to reduce personnel spending by 1.4 billion euros ($1.5 billion), the maker of Mercedes-Benz cars said Friday in a statement. The company plans to widen early-retirement programs and offer buyouts to reduce administrative staff in Germany.
Daimler, which plans to reduce management positions by 10%, didn’t specify a total of jobs being eliminated. The German manufacturer said a labor agreement that rules out forced layoffs until 2029 will remain in effect.
“With the cornerstones for streamlining the company, now agreed with the works council, we can achieve this goal by the end of 2022," Wilfried Porth, Daimler’s personnel chief, said in the statement. “We will make the measures as socially responsible as possible."
The Stuttgart-based automaker’s shares fell as much as 1% and were down 0.6% at 51.64 euros as of 12:03 p.m. in Frankfurt trading. The stock has climbed 12% this year to value the company at 55 billion euros.
The world’s top producer of luxury and commercial vehicles set the scene for the cutbacks earlier this month when new Chief Executive Officer Ola Kallenius warned returns may remain depressed for the next two years. A target for 2020 of at least 4% operating return on sales at the main Mercedes cars unit disappointed investors, coming in at less than half of what French mass-market peer PSA Group generated in the first half of this year.
Automakers have unveiled plans for record investment to develop new technology to meet stricter emissions regulations in key markets. At the same time, global demand for new vehicles is softening after a decade of almost uninterrupted growth fueled by China.
Both Audi and BMW revealed plans this week for cutbacks after talks with unions. Audi plans to cull as many as 9,500 jobs in Germany, or roughly 15% of its workforce, to lift earnings by 6 billion euros. BMW hammered out a labor pact that included lower bonus payments for employees in Germany.
Daimler will offer to reduce weekly work hours and allow contracts for most temporary workers in administrative roles to expire.
The terms of Daimler’s existing collective bargaining agreement, including a scheduled pay raise next year, remain unaffected by the cutbacks, the automaker’s works council said in a separate statement.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.