German manufacturers know "the winter is coming."

Daimler has announced the decision to streamline the company by 2022, to be ready for upcoming challenges, which means dismissals for thousands of employees.

According to Reuters, at least 10,000 jobs (up to low five-digits) will be cut, which represents some 3% out of the 304,680 total (as of the end of Q3). A similar move was just announced by Audi.

The reason behind deep job cuts announced one after another (probably more of those coming) seems to be the weakening automotive market, combined with huge investment requirements in new topics like switching to electric cars, more autonomous technologies or connectivity.

Daimler itself describes it as: “The automotive industry is in the middle of the biggest transformation in its history.”

"The automotive industry is in the middle of the biggest transformation in its history. 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 ten percent."

In our opinion, it's hard to blame plug-in cars, which in fact barely exceed a few percent of the market share at best (on average in larger markets like North America, Europe or China). The biggest factor must be the demand for ICE models, especially since Daimler's Mercedes-Benz was highly exposed to the Chinese market (currently the one that is declining the quickest).

Source: Reuters

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Daimler decides on key points to streamline the company

Stuttgart, Nov 29, 2019

  • Company and employee representatives agree measures to reduce staff costs and employment in a socially responsible manner
  • Implementation details will be further elaborated in the coming weeks

Stuttgart – Daimler and the General Works Council have agreed on key points in order to streamline the Group structure and thus increase efficiency and flexibility. Therefore, measures to reduce costs and employment in a socially responsible manner have jointly been agreed upon. 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 in order to reduce jobs in the administration. The implementation of this Key Points Agreement will be further developed with employee representatives in the coming weeks.

Daimler aims to cut thousands of jobs worldwide by the end of 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.

The automotive industry is in the middle of the biggest transformation in its history. 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 ten percent.

"With the key points we now agreed with the works council to streamline the company, we can achieve these 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, Labour Director and Mercedes-Benz Vans.

In addition to the measures to streamline and rightsize 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.