German Manager Magazine: Daimler Truck: Works council boss Michael Brecht considers savings targets to be unrealistic003002

Works council head Michael Brecht (58) has criticized the savings targets of the commercial vehicle manufacturer Daimler Truck and described them as unrealistic. “If you set goals, then the goals have to be demanding, but ultimately also achievable,” said Brecht at the headquarters of the DAX group in Leinfelden-Echterdingen near Stuttgart.

Given the inflation and many opposing developments, this is very difficult. The company aims to reduce its fixed costs, investments and research and development expenses by 15 percent by 2025 compared to 2019. “I don’t think it’s realistic to reach this number,” said Brecht.

Where costs should go down

There is extreme pressure to reduce fixed costs, said Brecht. The focus would be on the costs of administration and sales. When it comes to sales, the aim is to eliminate certain processes. The company wants to relocate certain volumes that are currently being done in Germany to countries with lower cost structures, for example to Romania. If it’s not about changes in processes, but about pure relocations, the works council takes a particularly close look, says Brecht.

“Of course we need a decent return on sales, of course we have to work on the resilience of the company,” said Brecht. But: As a works council, it is not always crucial for him whether the last percentage point of the savings targets is achieved. “For me, the crucial thing is: Are we doing the right things now so that we really have a functioning company on the market?”

Where the company should invest more

Daimler Truck has developed excellently. Most recently, the operating margin in the industrial business – i.e. excluding financial services – was 9.8 percent. “A few years ago we would have given anything to achieve something like this,” said Brecht.

“The clear demand is: We want to have our own technologies,” said Brecht, looking to the future. There is enough money. “We have sufficient financial resources.” There are many areas where the company would have to invest significantly more. For example in research and development. Whether electrified drivetrain or battery technologies: Daimler Truck has to do significantly more to differentiate itself. When it comes to batteries, for example, there is a high degree of dependence on Chinese companies. The company cannot claim to purchase technologies that are important for its competitiveness.

Without funding, a battery cell factory will be difficult to realize in Germany. In countries such as Hungary it is easier to receive funding. In this context, Brecht also criticized the federal government’s debt brake. Germany has a comparatively low debt ratio. You have to think about whether you could take on a little more debt and, in the long term, build up technologies and an infrastructure that can keep up with the world.

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