German Companies Reduce Production, Staff to Fight Crisis | Business| Economy and finance news from a German perspective | DW | 21.01.2009
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German Companies Reduce Production, Staff to Fight Crisis

The deepening global economic crisis has resulted in two of Germany's top carmakers announcing plans to introduce shorter working hours as sales plummet. Retailer Metro also said it would cut its workforce.

The word Jobs in orange letters on a window in Frankfurt

More and more Germans are beginning to worry about the security of their jobs

While the world's leading luxury carmaker BMW unveiled plans to implement shorter working hours for 26,000 employees at four plants, Volkswagen, Europe's biggest automaker, said about 61,000 of its workers would be hit by a move to shorter hours at its German production sites.

This represents about two thirds of north-Germany based Volkswagen's workforce of 92,000 in Germany.

"This reduction in production will allow us to adapt our capacity to the level of demand," Volkswagen personnel chief Jochen Schumm said in a statement.

Deep cuts at Metro retailer

Metro headquarters in Dusseldorf

Metro's plan is to increase operating profits by 1.5 billion euros over four years

Adding to the signs of the impact on German business of the world economic slowdown, the country's giant retailer Metro said Tuesday, Jan. 20, it wanted to cut 15,000 jobs from its worldwide workforce over the next three years.

The job cuts formed part of a 750-billion-euro ($970-billion) cost-cutting program announced by the company. The plan aims to boost corporate operating profit by 1.5 billion euros by 2012.

"As a result of the current economic climate, we are weatherizing the company through the introduction of this program," Metro Chief Executive Eckhard Cordes said in a statement.

Metro's shares surged by nearly 10 percent to 26.81 euros in early trading Wednesday, a day after the announcement by the company with operations in 32 nations including in Asia, the Middle East as well as Central Europe and a combined global workforce of 300,000.

German carmakers idling workers

A car frame covered in a plastic sheet at a BMW factory

Several German automakers said they would shorten workers' hours

German companies have been announcing layoffs and production cuts as the global economic downturn has tightened its grip on Europe's biggest economy with the nation's key car sector in particular feeling the full force of the deterioration in world economic growth.

The German auto industry has been particularly hard hit as European new-car registrations dropped to a 15-year low in 2008, the European Automobile Manufacturers Association (ACEA) said last week.

The ACEA said new-car registrations slumped 7.8 percent to 14.7 million last year.

"The international financial crisis and the sharply slowing economy had a negative impact on car sales in Europe," the German car manufacturers association (VDA) also said last week.

Announcing the move to shorter working hours, Munich-based BMW said that about 38,000 fewer vehicles would be produced in February and March as previously planned.

Daimler, the manufacturer of Mercedes Benz luxury cars, announced last month that it was placing part of its workforce on shorter working hours as global orders shrank.

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