BMW Plans 5,600 More Job Cuts

MUNICH, Germany — Luxury automaker BMW AG said Wednesday it will cut another 5,600 jobs by the end of 2008, on top of 2,500 other positions that have already been eliminated, as it moves to pare expenses amid a wider cost-cutting program.

Speaking to reporters, BMW's head of personnel, Ernst Baumann, said that the jobs being cut include 2,500 full-time and 2,500 temporary workers in Germany, along with 600 other positions abroad, primarily international sales and distribution positions.

He said that another 2,500 positions _ all of them temporary _ had already been eliminated, bringing the total number of cuts and planned cuts to 8,100 positions, or 7.5 percent of the company's total work force of almost 108,000, including both permanent and temporary employees. The cuts to its permanent work force, which totals 80,000 worldwide, account for 3 percent of its staffers.

The Munich-based company did not say specifically where the 600 global job cuts would come. Within Germany, the cuts would be spread across its facilities with the exception of a plant in Leipzig.

BMW currently employs 4,700 people at its plant in Spartanburg, S.C., where it produces the X5 SUV and the Z4 Roadster. It plans to boost production there to 240,000 cars a year when it adds more SUV production at the plant but did not say if any of the cuts would be implemented there. The U.S. is the company's biggest market, and the lower dollar gives the company an incentive to ramp up production there.

BMW's brands include its namesake luxury cars along with the Mini and Rolls-Royce brands as well as motorcycles.

In December, BMW confirmed it would start cutting jobs after new Chief Executive Norbert Reithofer said he planned to focus on increasing the rate of return for the maker of the pricey and desirable sedans, sport utility vehicles and sports cars.

BMW said in September it would put "all cost structures to the test" and continue to standardize processes to reduce costs for each vehicle in development, production, sales and administration.

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It said then that it was targeting a rise in productivity of at least 5 percent per year, and Reithofer declared that "we will focus the entire organization on the return on capital."

Baumann said the cost of the cuts, including severance pay, benefits and other expenses, would likely be in the "three-digit million" euro range, though he did not specify how much. He did, however, confirm that the cuts would result in as much as 500 million euros ($743.7 million) in savings from 2009 and onward.

The IG Metall industrial union responded angrily to the announcement.

"A pretax profit of 3.7 billion euros ($5.5 billion) per year apparently is no longer enough for BMW," said the union's chief in Bavaria, Werner Neugebauer, who is a member of the automaker's supervisory board.

"Mr. Baumann appears to think he has to play the agitator in order to be able to push up the share price by leaving the work force in a state of permanent insecurity," he said.

Another IG Metall official, Horst Lischka, said that dismissals were ruled out for the next seven years _ "we have a cast-iron agreement on securing employment; no one can get past that."

Baumann said it was important to the company that cuts in the permament jobs "must happen on a voluntary basis."

Shares of BMW fell less than a percent to close at 37.08 euros ($55.07) in Frankfurt trading. That is part of a wider decline by the DAX index, which was down more than 1.1 percent.

In a nod to the rising euro, which hit a record high of $1.5087 earlier in the day, Baumann warned that other cuts could be coming if the dollar continues its fall.

Baumann told reporters that the carmaker intends to increase its overall productivity globally by 5 percent, and admitted its recent spurt in car sales won't last. But he did reiterate that the company plans to sell 1.8 million cars a year by 2012.

"The productivity gains will be bigger than sales growth in coming years," he said.

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On the Net:

http://www.bmw.com

Comments

[fact finder]

Moderators; Why is the parent spot missing.? Just curious.

[MilwaukeeDan]

The E-46(99-05) 3 series was a well engineered car that looked great, plenty of room on the inside/trunk, small on the outside. But like most Euro cars, lots of electronic problems and rattles up the wazoo. All the newest BMW model are not attractive, complicated and too expensive. An odd feature, the new 3 series has no dipstick, it has a sensor for the oil level, Sometimes this sensor goes bad and they have to drain the oil to check the oil level/quantity! What was wrong with the dipstick?

[almoguy]

About 15 years ago this joke was going around which I feel is apropos for today’s situation: Social scientists were studying the industry of man based on country of origin. So they gave to a team of two workers from Germany, Japan and the United States two 3 foot stainless steel balls. They then gave them access for six months to every machine tool available to man. After six months the researchers came back and the Germans had built a highly sophisticated and beautifully engineered car. The team from Japan had a room full of the most amazing electronics gear. When they visited the American team there was nothing, not even the two stainless steel balls to which they asked "where are the balls" and one American said "I lost mine" and other said "I tore mine up"

[retreadite]

Power interesting;

Milwaukee Dan are you serious?

I can say the late 90's VW engines in Golf's were "guaranteed" to never have their ATF checked which was a total crock, or they insist you go to a VW dealer which would rape you w/ your pants on. They'd blow up after a minor leak. Transmission failed. Screw you!! It's out of warranty, have a nice day.

[Dendroica]

Bear in mind that BMWs come with that 4 year full maintenance warranty. So everything, including oil changes are on their dime. Er, Deutchmark... make that Euro.

So if they overengineer it, that is their headache. I will say this much, my Mini needs an oil change once a year, or every 18,000 miles. They do make their vehicles relatively maintenance-free.

IIRC some very old cars didn't use dipsticks, but a glass tube that went into the cockpit, where you could see the actual levels!

[outnow]

German minister sees a 400 billion in write offs for banks on downgrading of CDOs. The financial problems are spreading worldwide with new dimensions to it being discovered all the time. With the falling dollar and the inability of BMW to manufacture high quality engines and transmissions overseas, there will be huge losses for each incremental fall of the dollar.

I will tell you more when I return from Munich. Real inflation in Great Britain nears 10%. US housing prices fell more than in the previous twenty years while prices jumped for cost-of-living items the most in twenty-five years. Hm...Bush says no recession and evreything is good.

[Buddhabman]

BMW has had a long ride up through the 90' & 00's, it has finally hit it's peak. Cheap money buoyed many people to get leases, that money is not floating around, with the dollar in the tank. In my drive on the 101 into LA i see 5 times more BMW's and MB's than I see American cars. M Series BMW's are nice and the top Benz's & AMG's are super nice but the rest are way over valued.

[Dendroica]

I don't know about that. The 3-series is just a few thousand more than a Toyota Camry or a luxo-SUV. They actually outsell the Volkswagen Passat in Europe, and are a top-10 selling saloon (what we call a "sedan".)

[Buddhabman]

5-10k is more than just a few K. Plus you are talking a plan lower 3 series vs a maxed out Camry.

[MilwaukeeDan]

In Europe, they outsell due to the fact most sales are 4 cylinder models and small diesels. They are a lot cheaper than what the US market cars are, you won't see manual seats or windows or manual HVAC controls here. And on your Mini, When that thing need a new engine at about 120,000 miles, you will also be money free, they could care less about you when the warranty runs out. The synthetic here is not as good as the synthetic oil is in Europe, beware. BMW oil is Castrol, while Mercedes uses Mobil 1. There were recalls(?) and quite a few M 3 motors were replaced under warranty due to spun bearings maybe due to oil breakdown and the 8,000 RPM redline.

[raymurt]

OMG! I need a tax break!
How do you expect me to pay for my next 5 series!
Oh, the humanity!

[fact finder]

Sot of looks like the depression is going world wide. Gooogle New World Order and The project for a New Century. Every thing is right on time. 1776

[KCFreedom]

So instead of raising prices for cars that mostly only rich people buy, it's better just to layoff workers so the CEO can get richer.

I say raise prices on the rich people and keep the jobs!

Of course, I'm not a shareholder...