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Daimler chief outlines plan to cut up to 1,100 jobs

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Via Financial Times

The new chief executive of Daimler has outlined plans to cut 10 per cent of managers in Germany, and up to 1,100 in total worldwide, according to a letter circulated by leaders of the carmaker’s works council.

An email sent by supervisory board member Michael Brecht to 130,000 Daimler employees on Friday claims that Ola Kallenius gave a “concrete figure” on job cuts earlier this week, for the first time since taking over in May.

In the wake of several profit warnings, Mr Kallenius had previously warned of having to make savings in order to pay for investment into electrification, and deal with the slowdown of the global car market.

Last month, the Mercedes-Benz owner said its earnings before tax in 2019 would be “significantly below” the €11bn it posted last year. “We have to significantly reduce our costs and consistently strengthen our cash flow,” Mr Kallenius said at the time.

“Management never misses an opportunity to draw attention to the poor financial situation of our company,” Mr Brecht’s letter read. It alleged that executives had proposed a delay to previously negotiated pay increases. 

The employee representative reiterated a pledge to keep Daimler to an agreement reached in 2017, which prohibits operational redundancies — including some department leaders — in Germany until 2030.

A spokesperson for Daimler said the firm was in “constructive dialogue” with the works council, and added that it “wouldn’t comment on speculation”, ahead of a capital markets day in London and New York next week.

Daimler’s management is expected to outline a new strategy, as it struggles to transform its fleet in the face of upcoming EU emissions regulations and deals with ongoing legal troubles over alleged contraventions of diesel emissions regulations.

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Despite strong Mercedes-Benz sales in China last month, Mr Kallenius warned that Daimler has to “increase our efforts considerably”, in order to “master the transformation in the next few years,” in an unfavourable economic environment.

Joe Kaeser, the Siemens chief executive who also sits on Daimler’s supervisory board, told the FT that the industry was facing a turbulent few years.

“I’m just not sure this is just an economic downturn, you’ve got structural and economic issues, that’s the worst [situation] you can be in,” he said.

“The good news is [carmakers] are finally are getting it, the bad news is that they have quite a home base in Germany, and it will be a fundamental reduction of resources, if you go from conventional engines to electrical engines, there will be a lot of noise on the restructuring, and Germany is not good at getting things done quickly.”

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