Bloomberg News

Daimler Guarantees Permanent Employees’ Jobs Through 2016

October 05, 2011

(Updates with closing share price in seventh paragraph.)

Oct. 5 (Bloomberg) -- Daimler AG, the world’s third-largest maker of luxury vehicles, will guarantee the jobs of 130,000 permanent employees through 2016 in exchange for continued flexibility to hire temporary workers.

The deal, which extends protections in place since 2004, allows the maker of Mercedes-Benz cars, buses and trucks to use temporary staff for up to 8 percent of production employees, the Stuttgart, Germany-based automaker said in a statement today.

“They are ensuring an adequate work structure which would allow them to react in the case of a possible downturn in 2012,” said Jose Asumendi, a London-based Royal Bank of Scotland analyst who recommends buying the shares. “If demand drops off 15 or 20 percent next year, they can cut the temps.”

Mercedes, Bayerische Motoren Werke AG, and Volkswagen AG’s Audi are targeting all-time sales highs this year. Still, Daimler’s sales growth has slowed in recent months. Deliveries at the Mercedes-Benz brand rose just 2 percent in September, the carmaker said today.

The protection from forced layoffs covers about 130,000 workers at the manufacturer, which currently employs about 4,500 temporary staff, spokesman Markus Mainka said. The agreement comes two years after Daimler asked workers for 2 billion euros ($2.7 billion) in concessions, including fewer hours and a delayed wage increase in response to the financial crisis. The earlier job-guarantee agreement was due to expire this year.

Shares Rise

“We are securing necessary and important personnel flexibility to be able to optimally react to demand at any time,” Chief Executive Officer Dieter Zetsche said in the statement.

The shares rose 1.64 euros, or 5.3 percent, to close at 32.61 euros in Frankfurt trading today. The stock has dropped 36 percent this year, valuing the company at 34.8 billion euros.

Daimler’s move follows similar agreements at other German companies. BASF SE, the world’s largest chemicals maker, last November granted job security for the 33,000 workers at its Ludwigshafen plant. Siemens AG, the biggest German company by market value, said in September of last year it would indefinitely secure locations and jobs for all its 128,000 domestic employees.

“This is a sign of sustainable employment policy that’s very appropriate in light of the company’s current outstanding situation,” said Erich Klemm, Daimler’s top labor representative, said in the statement.

--With assistance from Alex Webb in Frankfurt and Benedikt Kammel in Berlin. Editors: Chad Thomas, Thomas Mulier.

To contact the reporter on this story: Chris Reiter in Berlin at creiter2@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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