cost containment

    http://forbes.com/feeds/ap/2004/07/12/ap1451619.html Associated Press 6,000 DaimlerChrysler Jobs at Risk 07.12.2004, 01:01 PM
DaimlerChrysler will move production of future versions of its Mercedes-Benz C-Class cars away from the company's biggest German plant - costing 6,000 jobs - unless it gets about about $620 million a year in cost savings, company executives said Monday.
Personnel chief Guenther Flieg said workers at Sindelfingen outside the company's Stuttgart base must bring labor costs in line with those at factories in the north German city of Bremen and in East London, South Africa.
Otherwise, new C-Class model production will be moved to those facilities "and the alternative would be we will have to part with 6,000 workers," most of them at Sindelfingen, Flieg told reporters. Some 41,000 people work at Sindelfingen now.
Mercedes-Benz chief Juergen Hubbert said that "the Sindelfingen factory is not the most productive plant, by a long ways."
The company is pressing its German workers to cut paid breaks and extra pay for late shifts and weekends before it will guarantee the company will invest in further production, which is not expected to begin until 2007. Workers have offered to forego a contractual rate of 2.8 percent slated for 2006, which would save 180 million euros ($223 million), but have balked at deeper cuts.
Similar trade-offs of cost concessions in return for guaranteed work are common in the German auto industry and are usually negotiated without great fanfare. This set of negotiations has been more rancorous and worker representatives have called for a nationwide day of protest by DaimlerChrysler workers on Thursday.
Workers at the company's Untertuerkheim in Stuttgart briefly stopped work on Friday to attend an information meeting as part of the protest campaign.
Production of new versions of the C-Class won't begin until 2007 but the investment decisions are being made now.
Hubbert said workers in Bremen in northern Germany had fewer holidays and less burdensome rules on paid break time than their counterparts at Sindelfingen.
"The cost disadvantages are serious," he said.
Production at Bremen could be pushed up to 1,200 a day from 700-750, said Hubbert. As many as 300 a day could be produced in East London, which makes versions for countries where the steering wheel is on the right side of the car.
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greek_philosophizer wrote:

One can argue at length if cost cuts have to take place at the Sindelfingen plant or not - what definitely makes the workers crazy is that the pay for board of management went through the roof since the aquisation of Chrysler.
I am sure a hot debate will evolve in the next time...
Juergen
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I think I've figured out a way to both lower production costs for Management and still let the Sindelfingen workers keep their benefits....
...make the C-Class cars 1" shorter.

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Why does this bother the workers? The board of management salary increases most likely have a negligible effect upon profitability.
The .62 Billion in savings that the company wants from the plant will add about 10% to net profits ( I think ).
That comes out to about 15,000 USD per worker at the plant in annual savings. The company must want significant concessions.
.
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Now that the workers have gone on strike I wonder what will happen.
If the workers want the company to be run for their benefit they might want to consider setting up an agressive stock purchase plan because the managers work for the stockholders.
.
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greek_philosophizer wrote:

That's right. But it is this _we save costs at the expense of the workers only but not at the expense of the board of management_; although the board easily could stand a - say - 20 per cent reduction in payment they always want more and more while at the same time reducing the workers salaries: Preaching water but drinking wine (as we say here in Germany).

It does not matter if 10, 8 or 12 per cent.
The facts: The union offered more work worth 200 million Euro, DC wants 500 million Euro. The Sindelfingen plant is the plant with the highest profit within the company. The weekly worktime is a nominal 35 hours, but effective worktime in Sindelfingen is 30,3 hours per worker on the line, in Bremen it is 31,7 (?) hours, that is 72 hours more per year, DC says production cost of a C-Class in Bremen is 500 Euro less than in Sindelfingen.

Yes, they _say_ they want.
What they really want is some extreme concessions from the workers and so they put the worst-case scenario on the table.
The point is that Mercedes is the cash-cow of the DaimlerChrysler group feeding high losses of Mitsubishi over Smart and Maybach to Chrysler - they have to be _extremely_ carefully they do not run-down the Mercedes brand even more than they have done in the past as brand loyalty is not as strong as it once was and one day customers could not buy enough Mercedes anymore to feed the losses of the other brands.
And another point is that the DaimlerChrysler board of management is not worth its payment, there are too many over-ambitious amateurs part of it - long-time workers do have a good feeling for the quality resp. non-quality of the board of management: The current board only wants to make personal money and is not interested in the long-term success of the Mercedes brand, their attitude is _people will always buy MBs_: That of course is basically right, but the question is if in the long run it is still enough people...
And to get some light on the losses:
Maybach total sale in Germany since production began is 57 cars, world-wide ca. 600. Break-even would be around 13.500 cars in the first 10 years - absolutely no way, so Maybach will _always_ loose money, MUCH money.
Smart still has to earn the up-to-today loss of ca. 2000 million Euros - still a long way, optimistic view is to reach break-even around 2007. IMHO it'll be 2010 or later... Crossblade is a total flop, new unused Crossblades not even sell for half-list price, fortwo getting old, action needed not too far in the future, Roadster and Roadster-Coupe selling slow, forfour _has_ to become a strong seller otherwise break-even will take even longer than scheduled.
Mitsubishi - emergency brake pulled by DC. In the last year Mitsubishi lost 740 million Euro. That was due to faulty credits given to Mitsubishi customers - sales declined when these _everyone who wants a credit gets a credit_-philosophy was ended: Mitsubishi cars only sell over the price, not over the cars themselves, that is because the brand has no real profile - that is long-known, but the DC board of management has not even realized this until today...
Mercedes - flops are Vaneo, CLS will be a flop in terms of sales figures, Unimogs too expensive so sales are low, C-Class Sportscoupe sales are low, C-Class not selling well, too, the face-lift will have no significant long-term effect in boosting sales I fear... SLR is as superfluous as a car can be - sales low, too.
Fuso - DC has a 65 per cent stake. The commercial vehicle brand has severe problems as in March 112.000 trucks had a recall and now there is a new recall of 182.000 trucks...
Chrysler - Rebate war in the US going on affecting Chrysler profits severely.
Also until now nearly no synergy effects of the merger of Daimler-Benz and Chrysler - if I remember correctly yearly synergy effects of at least 1000 million Euro were boasted by the board of management at the time of the merger...
Main problem of the DC group is head of the supervisory board, Hilmar Kopper, who still supports I-am-a-loudmouth- but-I-do-not-have-the-slightest-clue-how-DaimlerChrysler- has-to-be-run Juergen Schrempp ==:-((( Schrempp already ruined Dutch aircraft maker Fokker...
Ok, enough of that - but these very obvious problems of the DaimlerChrysler group are also seen by many Mercedes workers who do a good job and so it is no wonder they do not perceive their payment shall be reduced but not the payment of the board.
Juergen P.S.: Free lesson for the DC management: The core value of the Mercedes brand is quality, quality - and quality. Once the reputation for quality is totally gone the brand is, too.
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( lots of clear language deleted for brevity)

Well, that put it into perspective.
What about the new Chrysler 300C? I think they are using a Mercedes transmission in it and it has 340 horsepower. This may be a case where there was some synergistic success.
It appears to be doing very well and it has the appearance of a love child produced by a drunken Mercedes male car and a hot Chrysler momma. Its getting lots of love.
I would even consider one except that I want a convertible and the dash has a bit too much rectangularity.
.
.
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