DaimlerChrysler to Eliminate 6,000 Jobs
By DAVID McHUGH
Associated Press Writer
Published January 24, 2006, 10:04 AM CST
BERLIN -- 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.
Copyright © 2006, The Associated Press
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