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Daimler’s Boosted Cost-Cutting Target Puts 20,000 Jobs at Risk
Published Jul 22, 2020 02:01PM ET
Updated Jul 22, 2020 02:27PM ET
© Bloomberg. Workers wearing protective face masks affix parts to the underside of an automobile on the assembly line inside the Mercedes-Benz AG automobile plant, operated by Daimler AG, in Kecskemet, Hungary, on Thursday, May 7, 2020. Hungary’s monetary authority is sticking to its projection for a 2%-3% increase in gross domestic product even as the government, bank analysts and foreign institutions expect a deep contraction due to the coronavirus pandemic.
(Bloomberg) -- Daimler (OTC:DDAIF) AG’s plans to make deeper cost cuts than planned before the global pandemic could translate to the elimination of about 20,000 jobs, according to people familiar with the matter.
The Mercedes-Benz maker has boosted its labor-cost savings target to 2 billion euros ($2.3 billion) from 1.4 billion euros, said the people, who asked not to be identified because talks with union representatives are still ongoing. The final number of job cuts will be determined by different factors, including acceptance rates of voluntary buyouts and efforts to outsource some IT services.
A Daimler spokesman declined to comment on speculation. Manager Magazin reported earlier Wednesday that Daimler might cut as many as 30,000 jobs. The Stuttgart, Germany-based company has almost 300,000 employees worldwide.
Daimler will give a clearer picture of its earnings performance Thursday, a week after reporting a preliminary second-quarter loss of 1.68 billion euros before interest and taxes. A recovery in vehicle demand late in the second quarter spared the company from losing as much money as analysts were expecting, sending shares climbing to the highest in more than a month.
“The outlook and depth of restructuring will be of equal interest to investors,” Bloomberg Intelligence analysts Michael Dean and Gillian Davis wrote in a July 17 report looking ahead to Daimler’s full results.
Chief Executive Officer Ola Kallenius said during Daimler’s annual general meeting earlier this month the carmaker must sharpen its expense-cutting efforts to shore up returns. The company is reviewing its global manufacturing network to get rid of excess capacity, which may lead to the sale of a factory in France. It has already halted plans to expand a site in Hungary.
©2020 Bloomberg L.P.
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