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DaimlerChrysler to cut 8,500 jobs in Germany

Associated Press

FRANKFURT, Germany — Automaker DaimlerChrysler AG said Wednesday it will cut 8,500 jobs in Germany at its Mercedes Car Group in a bid to return the troubled brand to profitability.

The company said the cuts will come through voluntary termination agreements over the next year and result in charges of 950 million euros ($1.11 billion).

DaimlerChrysler, the world’s fifth-largest car maker, said the charges will be posted in the fourth quarter and aren’t expected to hamper the company’s outlook. The automaker had said previously that it expects to beat last’s year operating profit of 5.8 billion euros ($7 billion).

The announcement came after Dieter Zetsche, who took control of Mercedes this month and is set to become chief executive of DaimlerChrysler at the beginning of 2006, outlined the plan to the company’s supervisory board in the United States earlier in the day.

The Mercedes division was once the pride of the company, and industry watchers are keen to see if Zetsche can invigorate it the way he did Chrysler, which posted its eighth straight quarterly operating profit in July.

DaimlerChrysler shares closed up nearly 4 percent at 45.65 euros ($54.95) in Frankfurt trading. The company’s U.S.-traded shares rose $2, or 3.8 percent, to close at $54.83 Wednesday on the New York Stock Exchange.

Finance director Bodo Uebber said in a conference call the company’s supervisory board accepted the recommendations and approved the plan.

“The supervisory board has taken this into consideration and they agreed to make the necessary budget available,” he said. “The works council, they agreed, they accepted this.”

Under the initial outline, workers can volunteer to be phased out and will be given financial benefits, including job training and help in starting their own business, if needed, said Guenther Fleig, human resources director for the company’s management board.

“This decision to reduce the number our employees hasn’t come easy to us, but we have created the basis for profitable growth in the future,” he said. “We are making a very fair offer to our employees, a very attractive offer.”

The program will target workers at plants in Sindelfingen and Bremen, which produce the C-Class cars.

Works council spokesman Erich Klemm agreed that there was a surplus in the number of workers, but said no one would be forced to leave Mercedes under the terms of a deal signed in 2004. That agreement guarantees employment through 2011.

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