The top manager’s biggest problem child, however, is the bus business, which is still suffering severely from the consequences of the corona crisis. “In April 2020 we didn’t get any more orders in one fell swoop,” says Daum. In many cases, his company was also unable to complete existing orders at the time.
“Many customers have told us: If you deliver the buses they have ordered to us, we will go bankrupt,” explains the 61-year-old. Despite contractual rights, the customers were not pressured to take delivery, but instead the buses were initially taken into their own inventory.
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There is hardly any improvement in sight. “We are currently experiencing a storm on tour buses,” states Daum. Daimler is currently slowly ramping up production in its touring coach plant in Neu-Ulm. “But that is only possible for a finite time,” emphasizes Daum. Before the travel companies would order new vehicles again, they would first have to generate solid cash flows again. “It will go up again, but it will take a while,” believes Daum. Years could go by.
Vita Martin Daum
Nevertheless, Daum wants to stick to the bus business. The long-term potential of the area is very attractive. In future, Daimler Truck wants to score more points with its Mercedes coaches, especially in North America, and offer an alternative to short flights.
In the medium term, the buses will also be powered by a hydrogen-based fuel cell. “That will help us to remain the best-paid bus manufacturer in the world,” says Daum.
Read the entire interview here:
Mr. Daum, you are a devout Protestant and feel obliged to uphold Christian values in business life too. At the same time, you want to trim Daimler Truck for returns as quickly as possible and are ready to make “tough decisions”. How does that fit together? I don’t see any contradiction here. Living Christian values ultimately means taking responsibility – for customers, employees and the environment. I can take on the slightest responsibility as a manager if my company lacks the means to invest in the future. Solid finances are therefore a basic requirement for good, responsible and also Christian corporate management.
The Bible says: “You should love your neighbor as yourself.” As CEO, who is next to you shortly before the listing on the stock exchange – the shareholder? Shareholders, customers and employees are absolutely equal. If either of these groups is missing from the equation, it won’t work. The investors provide us with the capital so that we can get started. Customers have to be enthusiastic about our products and their benefits in order to buy them. And without the commitment of our employees, we won’t get a single truck off the assembly line anyway. Nothing is as efficient as satisfied employees.
Many in your workforce are currently worried about the threat of cutting thousands of jobs. Christian responsibility also includes clear statements about the future. Unfortunately, we need fewer jobs to manufacture electric vehicles than we do to build trucks with internal combustion engines. We have to adjust to that. Fortunately, the changeover takes place over a very long period of time, so that we can cope with the change in a socially responsible manner.
What added value does the Daimler Truck spin-off actually offer your employees? Quite a few fear that this step is primarily about the well-being of investors, so I have to disagree. The benefits that result for the shareholders ultimately only reflect the advantages that result for all other groups. Thanks to our independence, we can assert ourselves much better in the market. We can make decisions faster, raise capital more easily, enter into partnerships faster and are more attractive to investors. We don’t have to worry about competitors or the transformation. We are a very healthy company and we are getting even stronger. And our employees as well as the shareholders benefit from this.
In the Daimler Group, the truck business was often seen only as an accessory to the dominant car division. Is Daimler Truck now overcoming its inferiority complex with the spin-off? We have always been a global company and world market leader in our field.
Lack of chips slows sales
How independent will Daimler Truck be in the future? Mercedes-Benz remains a core shareholder and should watch your costs and margins with eagle eyes. It is Mercedes-Benz’s clear will to be a long-term shareholder with us. There are no thoughts of getting out early. I am also delighted to have Harald Wilhelm and Renata Jungo Brüngger, two experienced colleagues from Mercedes, on the Supervisory Board. The voice of the shareholder Mercedes-Benz will be no different from that of other investors.
Your future chairman of the supervisory board, ex-Siemens boss Joe Kaeser, is considered to be a man with clear creative aspirations. How is your relationship? We get along very well. When I received the offer to continue as CEO, it was very important to me that the relationship with the chairman of the supervisory board was excellent. My acceptance was therefore closely related to Joe Kaeser’s appointment. We value each other very much. You can say: he wanted me and I wanted him.
Together you have to increase the profitability of Daimler Truck. But just before the spin-off, you run out of chips and energy and raw material costs rise rapidly. What additional burdens do you anticipate?
I cannot tell you in detail just yet. One thing is clear: the higher energy and raw material prices will ultimately also be reflected in the price of our products. Without a shortage of chips, we would be heading for record sales this year and next. The demand is great, so the current situation is all the more annoying.
A segment that is struggling a lot, regardless of the lack of chips, is the coach business. Are there slowly signs of improvement? The coach is in fact the segment that was and is hardest hit by the corona crisis. In April 2020 we did not receive any more orders in one fell swoop. In many cases, we were also unable to complete our existing orders at the time.
Why? Many customers have told us: If you deliver the buses they have ordered to us, we will go bankrupt. Although we had the contractual rights, we did not press the customers to take delivery, but instead took the buses into our inventory first. That too is a Christian responsibility.
At your bus plant in Neu-Ulm, there was short-time work for months. What’s next? We will have completed the few orders we have by October and are slowly ramping up production again. But that only works for a finite time. The first Flixbuses and tour operators are back on the streets, but not yet to the extent they were before the corona crisis. Before travel companies order new buses, they first have to generate solid cash flows again. It will go up again, but it will be a while longer.
Can you really afford to drag the coach business and the Neu-Ulm plant through for so long? However, the long-term future of the company is more important to me than short-term capital market success. We have a long tradition in our touring coach production in Neu-Ulm with the Setra brand, which we want to continue. We are sure that very good, sunny times will come again.
Trade disputes as a risk
But nostalgia alone is unlikely to convince your investors that the plant will be preserved. Our Setra buses are extremely profitable. Our investors know that too. The long-term potential in the bus sector is also extremely attractive. Take a look at North America, for example. So far we have hardly been present with coaches. But only recently we presented a Mercedes touring coach there: extremely luxuriously equipped and networked. This is the ideal vehicle to replace the plane for short flights on the long-distance route in the USA. In the medium term, we also want to offer a CO2-free bus with a fuel cell. That will help us to remain the best-paid bus manufacturer in the world.
You want to produce the fuel cells together with Volvo Trucks. If the Swedes are also your first choice when it comes to the further development of heavy diesel engines, I will let you know in advance what our plans are.
We ask for it. But from which area should the partner come from? That has to be someone who knows the business.
Buses from Daimler Truck
“We want to remain the best-paid bus manufacturer in the world.”
(Photo: Daimler)
Mercedes Pkw works with Geely on the production of small engines. The Chinese are also pushing into the commercial vehicle business and are involved in Volvo Trucks. Would Geely be an exciting partner for you too? We are having many interesting conversations these days. One thing is clear: At Daimler, we have the combustion engines with the lowest consumption and, via our platform, the largest volumes. Overall, the numbers of heavy engines will decrease, so we want to share the expenses that will be necessary in the future in order to be able to invest more money in batteries and fuel cells.
Your trucks and buses are in demand all over the world. How damaging are the increasing tensions between China and the US to your business? This is one of the greatest challenges of the future. At Daimler Truck, we don’t know any national borders. With us, it doesn’t matter which passport someone has. We speak English in our meetings. Together we develop and produce products that solve problems. Sanctions of any kind are counterproductive for our business model. And also for the respective countries themselves.
Whenever a country raises trade barriers, it costs prosperity in the country itself. It is politicians who raise trade barriers. The population then has to pay for it with more expensive and poorer products.
But are you prepared in the event the conflict between China and the US intensifies? In the truck sector, 80 percent of our business comes from Europe or North America. A transatlantic disruption would therefore be much more problematic for us than a conflict between China and the USA. That’s probably a bigger issue in the passenger car space.
Mr. Daum, thank you very much for the interview.
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