The CEO of Continental AG, Manfred Wennemer, has set aggressive targets for the newly acquired Siemens VDO division. Substantial job losses and plant closures are possible.
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Speaking in the Frankfurter Allgemeine Zeitung, Wennemer said that he is expecting a return of between 10 and 12 percent from the division. He said the goal should be reached as soon as possible and that it would be a surprise if it were not reached by 2010.
On Thursday the European Union Commission approved Continental’s takeover of Siemens VDO Automotive AG without conditions.
This enables Continental to close the transaction in the beginning of December and transfer the purchase amount, EUR11.4bn including tax benefits of around EUR1bn, to Siemens AG. The integration of Siemens VDO into the Continental Corporation will begin immediately after closing.
Speaking at the weekend Wennemer said that he would be able to give precise plans for each production location, including how many jobs would be cut, within a few months of the closure of the deal. Wennemer said he has not given any guarantees to any plants. He said it would not make sense to rule out any plant closures.
Continental is hoping to profit from the trend towards low-cost cars. Even the US$2,000 car segment is interesting to Continental, Wennemer told the Frankfurt-based newspaper. “We are already supplying braking systems to China for cars that cost EUR5,000. We earn money on that.”
