Daimler announces further job cuts as technology investment bites

2 December 2019

German carmaker Daimler is to cut at least 10,000 jobs worldwide as it looks to invest further in electric vehicles.

The company has agreed on key points with the General Works Council that will see the group streamlined to increase efficiency and flexibility. Measures to reduce costs and employment in a socially responsible manner have been discussed, Daimler said in a statement.

The news follows an announcement that the German group will look to cut the number of managers it employs in an effort to save money. The latest cuts are scheduled to be completed by 2022.

The agreed job protection in Germany until the end of 2029, which was promised and agreed upon in the spin-off of Mercedes-Benz Cars & Vans and Daimler Trucks & Buses, stays untouched for Daimler AG, Mercedes-Benz AG and Daimler Truck AG.

Changing times

′The automotive industry is in the middle of the biggest transformation in its history,’ Daimler adds. ′The development towards CO2-neutral mobility requires large investments, which is why Daimler announced in the middle of November that it would launch a programme to increase competitiveness, innovation and investment strength. Part of this programme is to reduce staff costs by around €1.4 billion by the end of 2022 and, among other things, to reduce the number of management positions worldwide by 10%.

Daimler will, among other things, use natural fluctuation to reduce jobs. In addition, the possibilities for part-time retirement will be expanded, and a severance program will be offered in Germany to reduce jobs in the administration.

Expenditure increasing

′With the key points we now agreed with the works council to streamline the company, we can achieve this goal by the end of 2022. We will make the measures as socially responsible as possible,’ says Wilfried Porth, member of the board of management of Daimler AG, Human Resources, and Director of Labour Relations, Mercedes-Benz Vans.

′The expenditure needed to achieve the [EU’s] CO2 targets requires comprehensive measures to increase efficiency in all areas of our company,’ said chief executive Ola Källenius last month when announcing the first round of cuts.

In addition to the measures to streamline and right-size the company, Daimler and the employee representatives also agreed to reduce further staff costs. Among other things, there will be offers to the workforce to reduce weekly working time. The company will extend expiring contracts for temporary workers in the administration very restrictively and will also be very restrictive in allowing 40-hour contracts for permanent employees.

Daimler follows Audi in announcing job cuts to invest in new technologies, with its rival planning to axe 9,500 jobs by 2024 as it looks to free up money to invest in the development of electric vehicles. The news will be a further blow to Germany’s automotive industry, which is struggling to shift away from diesel production as sales of the fuel type slow dramatically.