DaimlerChrysler says it will cut 6,000 administrative jobs over three years

[tarheels4]

DaimlerChrysler says it will cut 6,000 administrative jobs over three years

ASSOCIATED PRESS


BERLIN — The automaker DaimlerChrysler AG said today that it would reduce administrative staff by 20 percent over three years, cutting 6,000 jobs and saving some $1.2 billion a year.

The company said in a statement that the cuts would come in such areas as accounting, auditing and strategic planning.

[Dan Armstrong]

$1.2 billion/6000 = $200,000 per year, average. I don't care how big the company is, that's a lot of low-level VP or high-level Director jobs! They probably should have cut them long ago.

[Wes Bucey]

Originally Posted by Dan Armstrong

$1.2 billion/6000 = $200,000 per year, average. I don't care how big the company is, that's a lot of low-level VP or high-level Director jobs! They probably should have cut them long ago.

In fairness to my fellow economists everywhere, it may be instructive to point out that savings are not strictly salary, but overhead for infrastructure (real estate and utilities, equipment purchases or leases, auto discounts, etc.), support staff, travel, benefits, in addition to pure salary.

Oddly, I rarely see the other side of the economics - the average gross income each employee generates. For example, a machine shop with 10 employees (including executives and administrative staff) may generate $2 or $3 million in sales ($200,000 to $300,000 per employee.)

So, if the machine shop cuts 2 employees, does its gross drop $400,000 to $600,000? Probably not, but it will probably drop a little, but the overall increase in the bottom line is the only real number that counts, not the gross saving of dropping 2 employees. If we really want to examine Daimler's economics, we need more info. Guys who are still in the trade I was in DO get and examine those numbers, which they convert into decisions to buy or sell Daimler's stock.

This press release by Daimler will be roundly scorned in the analyst departments of investment advisors and investment banks throughout the world as "cotton candy for the masses."