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Daimler-Benz to cut 13,000 more jobs

Daimler-Benz plans to shed 13,000 jobs this year, after a reduction of 36,185 in the workforce last year, to 330,551.

The German engineering and car giant was reporting sharply higher sales figures as a result of buoyant output from the Mercedes-Benz car subsidiary, which was credited with driving group sales 7 per cent higher to DM104.1bn (£46.6bn).

The group said that under a plan set in hand in 1992 it intended to shed 69,000 jobs.

Mercedes-Benz reported an operating profit of DM2.245bn last year, compared with a DM1.267bn operating loss in 1993, as sales revenue rose 9 per cent and sales volume gained 14 per cent.

Cost cuts at Mercedes-Benz in the past two years are part of a restructuring that is "only half-done," Helmut Werner, Mercedes-Benz chairman, said. He added: "The hardest part is still to come."

There were plans to reduce domestic labour costs, use more bought-in components, restructure supply systems, and move production to markets with lower costs.

Mr Werner said cost-cutting in production and labour in 1994 alone "more than offset" revenue losses caused by drastic shifts in exchange rates, thus helping the car and truck subsidiary to return to profit last year. Much of that turnaround could be attributed to the commercial vehicle division, which was "highly profitable" in 1994 after a loss in 1993, he said.

The commercial vehicles division generated slightly more than half of Mercedes-Benz's operating profit last year, largely because of booming construction business in the US, low production costs, high product quality and clever marketing.

Mr Werner said "Our goal is to reach overall profitability nearing the US levels."

The US unit Freightliner reaches a break-even point at 50 per cent capacity utilisation, whereas in Germany break-even requires 70 per cent of capacity utilisation. Freightliner produces only about 20 per cent of its own components, about half of the own-production share in Germany, which keeps German production costs high.

On Friday, the Daimler-Benz group as a whole reported an operating profit of DM2.7bn, a sharp turnaround from a loss of DM3.3bn in 1993.