Just one day after rival Ford announced a sweeping restructure that could eliminate up to 30,000 jobs, DaimlerChrysler unveiled a so-called “new management model” that will eliminate 6,000 general and administrative (G&A) jobs world-wide from now until 2008.
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For those who remain, from board level down, there will be more responsibilities and tighter integration of job functions creating what DC hopes will be a faster, more flexible, leaner and more efficient organisation.
The German-US automaker expects to reduce G&A costs EUR1.5bn a year, mainly by reducing administration staff by up to 20% over three years.
“Our objective in taking these actions is to create a lean, agile structure, with streamlined and stable processes that will unleash DaimlerChrysler’s full potential,” said Dieter Zetsche, the newly installed chairman of DaimlerChrysler AG. ”We’re going to build on a strong product portfolio.”
“Over the last several years, we focused on our automotive business and started to streamline the core processes in our divisions,” said Zetsche. “But to safeguard our future in this competitive global industry, we need to apply that same equation across all general and administrative (G&A) functions with the added dimension of adapting to the needs of our business.”
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By GlobalDataAmong structural changes is a consolidation and integration of G&A functions, such as finance and controlling, human resources and strategy. These areas will be centralised to report to the respective head of that function throughout the entire company.
Redundancies between staff functions at the corporate and operating levels will be eliminated, thereby reducing the complexity of the organisation. A more integrated G&A organisation will result in more consistent processes, and reporting and decision-making will become shorter, faster and more efficient, DC said.
“We want our divisions to concentrate on the automotive core processes – development, production and sales,” added Zetsche.
The consolidation of corporate functions will occur throughout the company. The earlier decision for Zetsche to serve dual roles as chairman and head of the Mercedes Car Group, will now be reflected in the organisational structure as well.
Board members Bodo Uebber and Rudiger Grube will also continue to have dual roles: Uebber for finance and controlling, as well as DaimlerChrysler Financial Services; Grube for corporate development (including information technology) and DaimlerChrysler’s participation in EADS (European Aeronautic Defense and Space company). That will effectively reduce the number of board members to nine (from 12 about one year ago).
German board members currently based in Stuttgart-Moehringen will relocate in May 2006, along with their staffs, to Stuttgart-Untertuerkheim, and therefore closer to production. This means the DaimlerChrysler head-quarters function will be located in Stuttgart-Untertuerkheim and Auburn Hills, Michigan though several support functions and non-G&A functions will stay in Stuttgart-Moehringen.
Cooperation between the Mercedes Car Group and the Chrysler Group will become markedly closer, according to Zetsche, but “a clear priority within this effort will continue to further strengthen brand identity. You can expect to see more examples of collaboration especially when we can transfer knowledge between the groups, much as Chrysler Group tapped the rear-wheel-drive expertise of Mercedes-Benz in the development of the Chrysler 300C.
“Beyond that,” added Zetsche, “you will also see more examples of clearly defined ‘project houses’ where engineers from different divisions work together for the benefit of the whole company.” A current example is the joint project to develop hybrids, where Mercedes-Benz and Chrysler engineers are working side-by-side (with General Motors and BMW specialists). This joint team is creating a new two-mode hybrid system that will power future vehicles from the brands of both divisions. A second example is the collaboration on the world’s cleanest diesel technology called BlueTec, between Commercial Vehicles, Mercedes Car Group, and Chrysler Group.
Several other organisational changes will also be made. Corporate-wide research and technology will be merged with product development of Mercedes Car Group under board member Thomas Weber. The new organisation – group research & MCG development – will continue as the research centre for the entire company. Within this realignment, the new function will take on more responsibility for advanced engineering activities of all automotive divisions.
This action is expected to reduce the time-to-market of future technologies, keep research focused on customer-relevant innovations, and eliminate redundancies.
The commercial vehicles division, headed by Andreas Renschler, will also undergo changes. It will focus on commercial trucks as its core business and operate under the name truck group, while the bus and van business will be reported elsewhere.
Truck group will encompass: trucks Europe/Latin America (Mercedes-Benz), trucks NAFTA (Freightliner, Sterling, Thomas Built Buses), Mitsubishi Fuso Bus and Truck Corporation and truck product creation.
Meanwhile, the financial and operating results of bus and van operations will be reported in a new segment called van, bus, others.
The direct management of the bus and van businesses will permit a stronger orientation toward the unique needs of customers and markets in these product segments. Due to the commonality of powertrain and components, the bus business will report to the head of the truck group; the van business to the head of the Mercedes car group.
Together with other ongoing efficiency programmes (such as MCG’s CORE program), G&A costs are expected to be reduced by EUR1.5bn a year and the net effect of Tuesday’s announcement will be EUR1bn annually.
The programme will start immediately, and take three years to fully implement. It is expected to require an overall expenditure of about EUR2bn from 2006 to the end of 2008.
