DaimlerChrysler may axe 8000 Mercedes workers

28th September 2005, Comments 0 comments

28 September 2005, STUTTGART, GERMANY - German-U.S. auto group DaimlerChrysler was on the verge Wednesday of axing more than a tenth of its workforce at the six German plants that make luxury Mercedes-Benz cars.

28 September 2005

STUTTGART, GERMANY - German-U.S. auto group DaimlerChrysler was on the verge Wednesday of axing more than a tenth of its workforce at the six German plants that make luxury Mercedes-Benz cars.

A day after ailing Volkswagen announced a blow to labour power with a low-pay contract at one of its German production lines, Mercedes staff sullenly awaited the latest bad news in their company's struggle to revive the marque's fortunes.

One year ago, Mercedes won minor pay cuts by promising no lay-offs among the 77,000 staff before 2012. But that promise does not preclude severance pay or pensions for those who go voluntarily.

A few months ago, 5,000 were expected to go. But news reports Wednesday said the tally was likely to exceed 8,000. DaimlerChrysler refused comment, but union leaders appeared resigned to the cuts as the first act of designated new CEO Dieter Zetsche.

Financial markets welcomed the news. Shares in DaimlerChrysler were the main blue-chip gainer on the Frankfurt Stock Exchange, rising 2.6 per cent to EUR 45.06 by mid-afternoon.

In Stuttgart, the company's headquarters town, the newspaper Stuttgarter Nachrichten said the company planned to exercise an option in the July 2004 labour contract to offer early retirement or severance to a further 3,800 staff at its car plants.

Another German newspaper, Bild, the total job cuts to 8,600, including the 5,000 foreshadowed in recent months.

While workers contemplated the sudden end of their working lives in a nation where only 20 per cent of 60-to-65-year-olds actually have any work, according to government statistics, labour advocates said the move was typical of globalization destroying jobs.

"We'll make sure they pay for this," said one unionist grimly. A financial news agency, DPA-AFX, said the group faced "substantial restructuring costs", higher than EUR 100 million, in the fourth quarter to compensate staff who agree to resign.

In the first two quarters of the year, DaimlerChrysler took a charge of EUR 1.1 billion to reorganize its loss-making micro-car subsidiary, Smart, and said profit for the full year would be reduced.

Zetsche, 53, is to formally take over at DaimlerChrysler on January 1 with a reputation for laying off 26,000 staff at Chrysler to restore the company's U.S. division to economic health.

His friend Wolfgang Bernhard, who came up through the ranks at Mercedes, now works as head of brands at Volkswagen and is seen as the hand behind Tuesday's deal to cut pay rates on a VW assembly line that is to make a new SUV.

In a sign of the chill wind blowing through the German auto industry, Bernhard had indicated he would demand Tuesday's terms, essentially a 20-per-cent pay cut to learner rates, for workers on other Volkswagen production chains.

DPA

Subject: German news

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