Daimler Labor Leaders Reject Layoffs, Factory Closures Despite Coronavirus Impact

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Labor leaders at Daimler AG (DAI.DE) are balking ahead of talks on possible factory closures as a result of the coronavirus pandemic that contributed to $2.21 billion in second-quarter losses. Bloomberg reported a letter sent by labor leaders to Daimler executives indicates the union will oppose changing the current contract, which rules out layoffs and factory closures for the next decade.

Negotiations are scheduled for Friday.

The letter said job guarantees “are not up for debate,” Bloomberg quoted. “We’re also not talking about factory closures.”

The letter was signed by Michael Brecht, the top labor representative and a supervisory board member, and his deputy, Ergun Luemali.

There was no comment from Daimler.

Daimler was in the midst of a restructuring before the pandemic hit. That restructuring had been scheduled for completion by 2022 but CEO Ola Kallenius said Thursday the timeline had been extended to 2025.

Daimler initially estimated it needed to cut 15,000 jobs through voluntary measures and attrition. The figure was boosted more recently to 20,000 positions and Manager Magazin said the target could be closer to 30,000, about 10% of its global workforce. The company hopes to save $2.3 billion.

“Going forward, we are firmly determined to continue to improve the cost base of our company. At the same time, we are committed to our key strategic objectives: to lead in electrification and digitalization,” Chairman Ola Kallenius said in releasing the quarterly results.

Revenue was down by a third compared with the same quarter last year, with vehicle sales down 34%.

Daimler suspended production in March and April. Kallenius said the company is beginning to see sales recover, especially in the Mercedes-Benz passenger car sector, particularly in high-end vehicles.

Other carmakers also reported poor results for the second quarter. Fiat Chrysler reported a 39% drop in new vehicle sales from last year’s level while General Motors reported a 34% drop and Ford reported a 33.3% decline.

Daimler shares traded up 4.26% Thursday at 40.83 euros ($47.34).

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