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BMW Plans Job Cuts Next Year

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MICHAEL POHL | December 21, 2007 11:10 AM EST | AP

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MUNICH, Germany — BMW AG said Friday it will cut thousands of jobs next year, three months after incoming CEO Norbert Reithofer said he would focus on increasing the rate of return for the automaker.

Mathias Schmidt, a spokesman at the Munich-based company, did not say exactly how many thousands of jobs would be cut. The Der Spiegel news magazine Web site put the figure at 8,000.

Schmidt said that most of the cuts would come in Germany, where the company employs some 80,000 workers. Heavy cuts are likely for temporary workers, but some permanent workers would be affected as well.

In Germany, BMW has between 6,000 and 8,000 temporary workers. Worldwide, BMW employs just under 108,000 workers, according to company figures.

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.

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."

Investors welcomed the move at BMW pushing shares up nearly 4.4 percent to 42.17 euros ($60.56) in Frankfurt.

BMW, whose brands include its namesake luxury cars along with the Mini and Rolls-Royce brands as well as motorcycles, earned 2.1 billion euros ($3 billion) in the first nine months of 2007, down 2 percent from 2.18 billion euros in 2006.

It attributed the slip to costs related to new market launches for models and production startups, as well as higher costs for raw materials and the "development of even more efficient and fuel-saving engines and the ongoing weakness of the U.S. dollar and Japanese yen."

However, nine-month sales rose 11.1 percent to 40.4 billion euros (nearly $58 billion) from 36.3 billion euros in 2006.