MB facing loss of profits, cuts 8500 jobs
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MB facing loss of profits, cuts 8500 jobs
FRANKFURT (Reuters) Sept. 28, 2005- DaimlerChrysler (DCXGn.DE) on Wednesday offered staff at its premium Mercedes Car Group division voluntary redundancy packages that aim to cut 8,500 jobs in Germany over 12 months.
Mercedes profits have collapsed this year due to model changeovers, the strong euro, hefty losses at minicar brand Smart and spending to fix quality problems at crown jewel Mercedes-Benz.
The world's fifth-biggest carmaker said the move would cost 950 million euros, to be offset by extraordinary income and efficiency gains.
It reiterated its forecast for a slight rise in 2005 operating profit excluding charges to restructure its Smart minicar business.
The Mercedes division employed around 105,000 staff at the end of last year, of which some 94,000 were in Germany.
"These headcount reductions are indispensable. They will contribute to significant improvements in the competitiveness of Mercedes-Benz through an increase in productivity," it said in a statement. "The measures will also contribute to the sustained safeguarding of production (in) Germany."
Mercedes profits have collapsed this year due to model changeovers, the strong euro, hefty losses at minicar brand Smart and spending to fix quality problems at crown jewel Mercedes-Benz.
The world's fifth-biggest carmaker said the move would cost 950 million euros, to be offset by extraordinary income and efficiency gains.
It reiterated its forecast for a slight rise in 2005 operating profit excluding charges to restructure its Smart minicar business.
The Mercedes division employed around 105,000 staff at the end of last year, of which some 94,000 were in Germany.
"These headcount reductions are indispensable. They will contribute to significant improvements in the competitiveness of Mercedes-Benz through an increase in productivity," it said in a statement. "The measures will also contribute to the sustained safeguarding of production (in) Germany."
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Fixing A Car Company article
FIXING A CAR COMPANY: Zetsche on Mercedes: 'A lot of work is ahead'
Detroit Free Press
CEO ready to turn around DaimlerChrysler's luxury division
September 27, 2005
BY SARAH A. WEBSTER and JOE GUY COLLIER
FREE PRESS BUSINESS WRITERS
Former Chrysler Group CEO Dieter Zetsche, now the head of Mercedes-Benz, is wasting no time in his effort to boost productivity at the luxury division of DaimlerChrysler AG.
RELATED CONTENT
QUESTIONS & ANSWERS: CEO's aim is to improve quality
Zetsche said Monday that the division needs structural, long-term changes, and he will start making them before year's end. "A lot of work is ahead of us," he said in an interview at the Auburn Hills-based headquarters for the Chrysler Group.
Zetsche, the executive responsible for turning around Chrysler over the past five years, took over the Mercedes division on Sept. 1 and will become chairman of DaimlerChrysler AG on Jan. 1.
He said Mercedes does not need the same kind of restructuring that Chrysler announced in 2001, which called for plant closings and massive job cuts. The Chrysler Group has cut at least 40,000 jobs since 2000.
Zetsche noted that there are serious concerns at Mercedes nonetheless. While he expressed confidence in Mercedes' product plan going forward, he said the division needs sweeping improvements.
"The productivity issue is a major issue, and we have to address it," he said, noting that a plan could be announced before the first quarter of next year.
"It will be in the near term," he said.
While Mercedes is in talks with the plant workers union in Germany over potential changes that will lead to productivity improvements, Zetsche also noted that he is examining the entire Mercedes operation, not just manufacturing plants.
"It's engineering. It's the whole sales organization," Zetsche said. "It's every part of the entire Mercedes group, which is under a magnifying glass and where we are looking for opportunities. And, of course, the Mercedes Car Group headquarters is involved as well."
Job reductions are a possibility, Zetsche said, although he refused to elaborate.
"That is always one part of the consideration," he said.
Whatever changes might come, Zetsche said workers at the Chrysler Group in Auburn Hills will continue working more with Mercedes employees in Germany to streamline operations.
"There's still opportunity, and of course I'm in the best position now to foster any kind of integrated approach in this regard," he said.
The Mercedes division, which sells Mercedes-Benz, Smart and Maybach vehicles, employs 106,351 workers, up 1% from 105,558 a year ago. The Chrysler Group workforce, meanwhile, has shrunk 4%. It had 85,753 workers at the end of June, compared to 89,183 a year ago.
While Chrysler has posted operating improvements, earning $658 million in the second quarter, Mercedes' performance has been an ongoing concern.
Mercedes has deteriorated every quarter since the April-though-June period in 2004, hitting a low during the first quarter of this year, with a loss of $1.2 billion. Operating profits for the Mercedes division bounced back slightly to $15 million in the second quarter, but they were still down from $856 million the same quarter a year ago. That's a 98% drop in profits from the same April-through-June period a year ago.
Zetsche said he thinks Mercedes has turned a corner and he expects continued financial improvements, but only as long as Mercedes implements an improvement plan.
"I anticipate that things continue to get better provided that we do the necessary steps," he said.
'No silver bullet'
As his focus shifts to Mercedes, Zetsche said Chrysler is well-positioned to grow. Following the lead of General Motors Corp. and Ford Motor Co., Chrysler had been offering employee pricing discounts, which end this week.
The end of this pricing model shouldn't have a dramatic impact on Chrysler, he said. Chrysler selectively chose which 2005 models received price discounts and has already started selling 2006 models without the incentives.
"So we don't have a total swing, which some of our competitors might experience," Zetsche said.
DaimlerChrysler also is taking a different approach than some of its competitors in developing hybrid vehicles -- cars and trucks that use both internal combustion engines and electric motors to get better fuel efficiency.
The Chrysler Group's first hybrid, a version of the Dodge Durango, won't reach consumers until late 2007 or early 2008. Honda, Toyota and Ford already have hybrids on the market.
Hybrids help save gas in city stop-and-go traffic, but they don't necessarily improve fuel efficiency on the highway.
The auto industry needs to look at a variety of ways to reduce emissions and improve fuel efficiency, including greater use of cleaner burning diesel and bio-diesel fuels, Zetsche said.
"There is no silver bullet," he said. "It's a lot of stuff we have to do right, and the hybrid is one of them."
The drive for greater fuel efficiency has not dampened consumer demand for vehicles with the interior space, visibility and off-road capabilities of SUVs, Zetsche said. SUVs will continue to be a vital part of the product mix.
The Chrysler Group has two smaller SUVs, the Jeep Patriot and Jeep Compass, slated for production next year. "It's not in the first place SUV versus any other body style, but what kind of fuel consumption you can accomplish," Zetsche said.
As he prepares to take over as the top executive for the entire DaimlerChrysler company, Zetsche said he believes Mercedes and Chrysler are both positioned to perform well. The 1998 merger between the two companies was beset by problems, first at Chrysler and now at Mercedes.
There's no reason why both can't succeed, he said.
"At the end of the day, how to get there is very simple: Build the most exciting cars, build them the highest quality with the lowest cost and sell them to add value to the brand and the customer," Zetsche said. "Execution is the part that is a little more complicated."
Detroit Free Press
CEO ready to turn around DaimlerChrysler's luxury division
September 27, 2005
BY SARAH A. WEBSTER and JOE GUY COLLIER
FREE PRESS BUSINESS WRITERS
Former Chrysler Group CEO Dieter Zetsche, now the head of Mercedes-Benz, is wasting no time in his effort to boost productivity at the luxury division of DaimlerChrysler AG.
RELATED CONTENT
QUESTIONS & ANSWERS: CEO's aim is to improve quality
Zetsche said Monday that the division needs structural, long-term changes, and he will start making them before year's end. "A lot of work is ahead of us," he said in an interview at the Auburn Hills-based headquarters for the Chrysler Group.
Zetsche, the executive responsible for turning around Chrysler over the past five years, took over the Mercedes division on Sept. 1 and will become chairman of DaimlerChrysler AG on Jan. 1.
He said Mercedes does not need the same kind of restructuring that Chrysler announced in 2001, which called for plant closings and massive job cuts. The Chrysler Group has cut at least 40,000 jobs since 2000.
Zetsche noted that there are serious concerns at Mercedes nonetheless. While he expressed confidence in Mercedes' product plan going forward, he said the division needs sweeping improvements.
"The productivity issue is a major issue, and we have to address it," he said, noting that a plan could be announced before the first quarter of next year.
"It will be in the near term," he said.
While Mercedes is in talks with the plant workers union in Germany over potential changes that will lead to productivity improvements, Zetsche also noted that he is examining the entire Mercedes operation, not just manufacturing plants.
"It's engineering. It's the whole sales organization," Zetsche said. "It's every part of the entire Mercedes group, which is under a magnifying glass and where we are looking for opportunities. And, of course, the Mercedes Car Group headquarters is involved as well."
Job reductions are a possibility, Zetsche said, although he refused to elaborate.
"That is always one part of the consideration," he said.
Whatever changes might come, Zetsche said workers at the Chrysler Group in Auburn Hills will continue working more with Mercedes employees in Germany to streamline operations.
"There's still opportunity, and of course I'm in the best position now to foster any kind of integrated approach in this regard," he said.
The Mercedes division, which sells Mercedes-Benz, Smart and Maybach vehicles, employs 106,351 workers, up 1% from 105,558 a year ago. The Chrysler Group workforce, meanwhile, has shrunk 4%. It had 85,753 workers at the end of June, compared to 89,183 a year ago.
While Chrysler has posted operating improvements, earning $658 million in the second quarter, Mercedes' performance has been an ongoing concern.
Mercedes has deteriorated every quarter since the April-though-June period in 2004, hitting a low during the first quarter of this year, with a loss of $1.2 billion. Operating profits for the Mercedes division bounced back slightly to $15 million in the second quarter, but they were still down from $856 million the same quarter a year ago. That's a 98% drop in profits from the same April-through-June period a year ago.
Zetsche said he thinks Mercedes has turned a corner and he expects continued financial improvements, but only as long as Mercedes implements an improvement plan.
"I anticipate that things continue to get better provided that we do the necessary steps," he said.
'No silver bullet'
As his focus shifts to Mercedes, Zetsche said Chrysler is well-positioned to grow. Following the lead of General Motors Corp. and Ford Motor Co., Chrysler had been offering employee pricing discounts, which end this week.
The end of this pricing model shouldn't have a dramatic impact on Chrysler, he said. Chrysler selectively chose which 2005 models received price discounts and has already started selling 2006 models without the incentives.
"So we don't have a total swing, which some of our competitors might experience," Zetsche said.
DaimlerChrysler also is taking a different approach than some of its competitors in developing hybrid vehicles -- cars and trucks that use both internal combustion engines and electric motors to get better fuel efficiency.
The Chrysler Group's first hybrid, a version of the Dodge Durango, won't reach consumers until late 2007 or early 2008. Honda, Toyota and Ford already have hybrids on the market.
Hybrids help save gas in city stop-and-go traffic, but they don't necessarily improve fuel efficiency on the highway.
The auto industry needs to look at a variety of ways to reduce emissions and improve fuel efficiency, including greater use of cleaner burning diesel and bio-diesel fuels, Zetsche said.
"There is no silver bullet," he said. "It's a lot of stuff we have to do right, and the hybrid is one of them."
The drive for greater fuel efficiency has not dampened consumer demand for vehicles with the interior space, visibility and off-road capabilities of SUVs, Zetsche said. SUVs will continue to be a vital part of the product mix.
The Chrysler Group has two smaller SUVs, the Jeep Patriot and Jeep Compass, slated for production next year. "It's not in the first place SUV versus any other body style, but what kind of fuel consumption you can accomplish," Zetsche said.
As he prepares to take over as the top executive for the entire DaimlerChrysler company, Zetsche said he believes Mercedes and Chrysler are both positioned to perform well. The 1998 merger between the two companies was beset by problems, first at Chrysler and now at Mercedes.
There's no reason why both can't succeed, he said.
"At the end of the day, how to get there is very simple: Build the most exciting cars, build them the highest quality with the lowest cost and sell them to add value to the brand and the customer," Zetsche said. "Execution is the part that is a little more complicated."
