Despite improving profitability, DaimlerChrysler – the parent company of Freightliner LLC and Detroit Diesel– is planning an array of global workforce cuts and restructurings so it can slim down and generate more earnings in the future.
In Berlin during his annual review of the company’s performance, new chairman Dieter Zetsche said the challenge for DaimlerChrysler is to become “faster, more flexible and more efficient – and therefore more successful.”
One key goal, he said, is to make the company’s administrative functions leaner and eliminate redundancies between DaimlerChrysler’s group and divisional levels. As a result, some 6,000 administrative positions are going to be cut worldwide, with executives in Germany offered severance agreements and early retirement. Another 8,500 jobs are being cut in the company’s Mercedes Car Group.
The planned restructuring of DaimlerChrysler’s commercial vehicles division – which includes Freightliner and Detroit Diesel – is also underway, Zetsche said. The division now known as the Truck Group will focus just on truck and bus businesses, while its Vans unit will report to the head of the Mercedes Car Group.
Overall, 2005 proved to be a strong year for DaimlerChrysler’s businesses, said Zetsche. Operating profits reached US$6.29 billion, excluding US$1.33 billion in restructuring charges, on 5% higher consolidated revenues of US$181.5 billion. Overall, DaimlerChrysler’s net income topped US$3.38 billion, he said.
Still, Zetsche said that wasn’t enough. “The return on net assets failed to cover our company’s capital costs,” he explained. “And we’re still far from our target of achieving a return on net assets of 10%. Our mission is to put DaimlerChrysler back on top.”