BMW to slash 8,100 jobs to boost profitability

28 02 2008

BMW to slash 8,100 jobs to boost profitability

Posted by: in Companies Competitive Strategy

Filed under: International markets, Management, Competitive strategy

Luxury automobile maker BMW AG revealed today its plans to slash another 5,600 jobs by the end of 2008 as part of a restructuring effort aimed at boosting company’s profits. Its decision is expected to bring annual savings of 500 million euros ($752 million) starting in 2009.

According to a BMW spokesman, part-time workers would take the hardest hit, with 5,000 fewer posts. Half of them had already been eliminated last year and the rest are set to be cut by the end of 2008. The restructuring plan also involves more than 3,000 full-time jobs, including 2,500 in Germany, and 600 other positions in other regions. Thus, the restructuring plan comes with a total number of 8,100 jobs cuts. This is 7.5% of BMW’s work force, which totals almost 108,000 workers.

Ernst Baumann, the company’s head of personnel, stated BMW may make more cuts if the dollar continues to decline. Baumann did not specify the total costs that the restructuring plan would bring, but he believes expenses will result in the “three-digit million” euro range.

BMW made an announcement at the end of December about a plan to slash its workforce as a part of an effort to lift its profits. However, the company had not confirmed so far the number of jobs cut, referring only to the inability to reduce expenses in some regions.

Norbert Reithofer, BMW’s new Chief Executive, also stated back in September of last year that the company plans to increase its productivity by at least 5% per year and to “focus the entire organization on the return on capital.”

Eliza Popescu is a financial writer for the online investment advisory service Investor’s Observer.