DaimlerChrysler Takes Pruning Shears To Management In Cost-Cutting Drive

DaimlerChrysler, having slashed thousands of jobs in its manufacturing base in Germany, turned its axe on management on Jan. 24, announcing plans to cut up to 6,000 white-collar jobs over the next three years. Around 60% of the cuts would be made in Germany and the company would relocate its German headquarters from Stuttgart-Moehringen to Stuttgart-Untertuerkheim as a way of bringing managers closer to the manufacturing operations, DaimlerChrysler said. "Management has to be where the action is," chief executive Dieter Zetsche said. The U.S. headquarters, which would shoulder about a quarter of the cuts, would remain in Auburn Hills, Michigan.

The exact arrangements for the cuts, which were aimed at slashing costs by $1.8 billion (1.5 billion euros) each year, had yet to be hammered out with employee representatives. DaimlerChrysler said it would cut up to 6,000 jobs "general and administrative" (G and A) jobs worldwide by 2008, representing about one fifth of the carmaker's G and A workforce. DaimlerChrysler said its new management model would entail the "consolidation and integration of G and A functions", such as finance and controlling, human resources and strategy. The overall cost of the program, which would begin immediately, would come to around two billion euros, it added.

The announcement shows how serious Zetsche, who slipped into the driving seat at DaimlerChrylser on January 1, is about cost-cutting and is interpreted as a signal that sacrifices were being demanded not only from the grass-roots workforce but from white-collar staff as well. Only recently, Zetsche recently announced plans to eliminate 8,500 jobs at Mercedes plants across Germany. And his reputation as a merciless cost-cutter was forged while he was head of the group's U.S. unit Chrysler where he slashed 26,000 jobs between 2000 and 2005.

The carmaker said the centralization and consolidation of corporate functions would occur "throughout the company", even top management. For example, Zetsche himself has already decided to continue serving as head of the Mercedes Car division even after taking up the position of group-wide chairman. Board members Bodo Uebber and Rudiger Grube would also have dual roles. Uebber would not only be head of DaimlerChrysler Financial Services, but would also be responsible for finance and controlling of the whole group; and Grube would be in charge not only of corporate development, but also of DaimlerChrysler's participation in the European Aeronautic Defense and Space Company (EADS). That would effectively cut the number of management board members from 12 to nine.

Copyright Agence France-Presse, 2006

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