Bayerische Motoren Werke (XE:BMW)
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By William Boston
BERLIN -- Daimler AG aims to slash thousands of jobs over the next three years and cut labor costs by $1.5 billion, the latest round of cost cuts in a sector squeezed between huge investment in new technologies and falling demand for cars.
The announcement Friday by the maker of Mercedes-Benz luxury cars caps weeks of negotiations with labor representatives. All major German auto makers and their suppliers are now shedding staff in the face of dwindling demand as economies slow in China, the U.S. and Europe after years of robust growth.
Daimler, BMW AG, Audi AG, Volkswagen AG and big suppliers such as Continental AG have announced tens of thousands of job cuts in recent months. Continental is closing several plants, including its factory in Newport News, VA.
The companies have blamed the slowing global economy, consumer angst over Brexit and the U.S.-China trade wars for their woes. But they primarily point to an expensive shift from internal combustion engines to electric cars as manufacturers come under increasing pressure to curb greenhouse- gas emissions.
Earlier this month, Daimler said it planned to cut 10% of its global management ranks, affecting more than 1,000 jobs. Daimler wouldn't put a number on the more far-reaching job cuts to its global workforce, which stood at 298,683 employees at the end of 2018.
Under the plan, Daimler said it would try to avoid any forced layoffs of full-time staff. Instead, the company will trim the ranks of temporary workers and not replace workers who retire, taking advantage of the large number of baby boomers reaching retirement age. The company also said it planned to offer voluntary severance packages and be more restrictive in awarding 40-hour contracts to permanent employees.
"With the key points we now agreed with the works council to streamline the company, we can achieve these goals by the end of 2022. We will make the measures as socially responsible as possible," said Wilfried Porth, Daimler's board member in charge of human resources, in a statement.
Under German labor laws, worker representatives have considerable influence over decisions that directly affect the staff. But many of the decisions that Daimler could take to reduce labor costs might not require labor approval.
The works council, which represents the workforce in most matters except wages, has agreed to the broad outline of the restructuring plan but hasn't committed to any specific number of jobs cuts, a spokesperson said.
Michael Brecht, the head of Daimler's works council, said in a statement that management needed to come up with a clearer plan for mastering the shift to electric.
"The workforce needs a clear and comprehensible strategy for going forward," said Mr. Brecht. "A reduction of capacities must not be born on the shoulders of the workforce."
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(END) Dow Jones Newswires
November 29, 2019 10:05 ET (15:05 GMT)
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