Daimler to Cut Labor Costs by 2bn Euros

German manufacturer Daimler is holding talks with its union representatives to find a solution which will allow it to cut down some 2 billion euros in labor costs for the current year, Autonews reported.

The company's personnel boss Guenther Fleig hopes to reduce Daimler's labor costs to 10 billion euros and even went as far as threatening with compulsory layoffs if an agreement isn't reached, in an effort to compensate for the losses caused by declining car sales.

The auto maker wants to maintain liquidity and plans on doing so by not sharing its 2008 profits with its workers, a deal that would have cost some 280 million euros. Just as a reminder, rival company Audi has shared a total of 230 million euros with some 43,000 of its workers, resulting in a 5,300 euros bonus for the work they have done in 2008.

The union's senior leader said that if the employer chooses not to share its profits, the workers will be compensated by Daimler with shares that are to be issued to the employees.

The costs cut measures come on the encouraging background set by the apparent success of the new E-Klasse, which drew no less than 350,000 people to Mercedes showrooms across Germany last weekend. In addition, Daimler even claims to already have received no less than 50,000 orders for the E-Klasse sedan.

Even more, at the beginning of last week, the German manufacturer managed to raise another 1.95 billion euros, in exchange for Abu Dhabi based investment Aabar's 9.1 percent hold in Daimler.

If we add the ongoing discussion with former rival BMW for joint purchasing efforts, we get an image of a company that should not be, at least at first glance, in financial distress. Daimler's new measures might be a sign that the company would rather play it safe than charging full steam ahead.
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About the author: Daniel Patrascu
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Daniel loves writing (or so he claims), and he uses this skill to offer readers a "behind the scenes" look at the automotive industry. He also enjoys talking about space exploration and robots, because in his view the only way forward for humanity is away from this planet, in metal bodies.
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