DaimlerChrysler says it will cut 6,000 administrative jobs over three years

Tuesday, January 24th 2006, 6:13 am
By: News On 6

BERLIN (AP) _ DaimlerChrysler AG will cut 6,000 administrative jobs, or one-fifth of its worldwide total, to save more than a billion dollars a year and make the big automaker leaner and simpler to run, the company said Tuesday.

CEO Dieter Zetsche said the streamlining, most of which would occur in Germany, would help boost growth and profits, and focus the company more closely on core production activities. He said it would remove management layers and improve cooperation between its divisions, especially Mercedes and Chrysler.

``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.''

Administrative staff would be cut 20 percent over three years, saving some $1.2 billion a year, the company said. The cuts 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.

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.