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Business

Faced with Finance Crisis, German Auto Firms Cut Production

As the global finance crisis ravages the auto industry, German carmakers and car parts manufacturers are forcing their employees not only to take extended holiday breaks but also to work fewer hours.

Daimler factory in Sindelfingen, Germany

Dozens of factories will be quiet in December

Carmaker Daimler wants to cut production even more than originally planned, according to news reports.

"We're currently preparing to reduce production by 30 percent compared with the previous year," Daimler factory manager Martin Daum told the weekly magazine "Automobilwoche."

Daum said the Stuttgart-based manufacturer wasn't planning to eliminate jobs, but would extend the mandatory Christmas break from three to four weeks. Factories would also shut for a week during the Carnival season in mid-February.

Volkswagen has also announced it would suspend production for over three weeks during the holiday season. Porsche was planning a total of eight production-free days and Ford said it would close its Cologne factory for five weeks starting in early November.

In addition to halting production in several factories, Munich-based BMW has also said it would lay off several thousand of its temporary workers.

Suppliers hurting from fewer orders

Tires at a Continental factory in Hanover, Germany

Fewer cars means fewer tires

Auto parts suppliers like Continental are experiencing a spill-over effect from the industry's financial hardships. In response to lower output by the manufacturers, the Hanover-based firm planned to reduce the hours its employees work, a spokesman told Reuters news agency on Saturday.

The move comes in addition to previously announced plans for a prolonged Christmas break and lay-offs among temporary workers.

Continental's principal shareholder Schaeffler is faced with a similar situation.

"In the past few months, carmakers' supply orders have abruptly fallen -- by 20 percent for us," Juergen Geissinger, chairman of the managing board at Schaeffer, told the Saturday edition of Sueddeutsche Zeitung. "That will certainly continue into next year."

Geissinger said that, in spite of the financial crisis, Schaeffler doesn't regret the Continental takeover earlier this year.

"We did everything right and we would do it all again," he said.

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