Managerial positions under threat in Daimler cost-cutting exercise

12 November 2019

12 November 2019 Daimler is looking to cut 10% of its managers in Germany, and around 1,100 worldwide, as it looks to cut costs and improve profits. The carmaker has issued several profit warnings in the last 12 months, as it struggles with a drop in sales, increased technology development costs, a series of recalls and fines over potential diesel emissions cheating. New chief executive Ola Källenius suggested when he took office, he would look to make €6 billion worth of savings. Last month, Daimler said its earnings before tax in 2019 would be ′significantly below’ the €11 billion it posted last year. ′We have to significantly reduce our costs and consistently strengthen our cash flow,’ Källenius said at the time Plans announced The new chief executive has been coy over his plans to further reduce costs since making his initial statement over the need for savings. But a leaked email, sent to 130,000 employees by supervisory board members Michael Brecht and Ergun Lumali, and reported on by several publications including SÃœddeutsche Zeitung and the Financial Times, claims that a ′concrete figure’ on job cuts has been given, and management positions will suffer most. The two senders, who are also members of the works council said in their correspondence that: ′Management never misses an opportunity to draw attention to the poor financial situation of our company.’ It alleged that executives had proposed a delay to previously negotiated pay increases. The letter also reiterated a pledge made in 2017 that Daimler would agree to prohibit operational redundancies, including manager positions, in Germany until 2030. A spokesperson for Daimler told the Financial Times that the company was in ′constructive dialogue’ with the works council, and added that it ′wouldn’t comment on speculation’, ahead of a capital markets day in London and New York this week. Moving forward Källenius is expected to give more details about a new strategy that will help it to weather the combined storm of rising CO2 emissions, diesel fines and technology development. The carmaker has already committed to research autonomous technology with rival BMW, while the two companies are pooling resources in their joint mobility venture. Other cost-cutting measures underway include selling 50% of its Smart city car brand to Geely, who will help turn the marque into an electric-only manufacturer, while Daimler may also end its partnership with the Renault-Nissan-Mitsubishi Alliance, as it looks to focus its efforts on its work with BMW. Källenius also launched ′Ambition2039′ when he took over the reins from Dieter Zetsche. This calls for the carmaker to fully decarbonise its core vehicle fleet over the next 20 years. The plan will see Daimler reach a fully carbon-neutral fleet by 2039, with 50% of its new vehicle sales being battery electric (BEV) or hybrid by 2030.