BMW firing 8.000 workers
It’s two-thirds as many workers as Chrysler just cut. BMW is eliminating 8,000 jobs, most in Germany and most non-union, all in an effort to shore up its earnings report.
What does it mean?
BMW’s sales have risen as others have fallen. Indeed, the BMW sales charts are the envy of the industry. But the more it sells, the less money it makes. It says it’s trying to change that.
But there may be more to it than the company is admitting. Meeting both new European and American emissions and fuel economy standards is going to tax BMW’s coffers. It makes its money selling cars that will be the most affected by the new regulations. It’s going to need all the money it can get to pay for the development costs, and there’s no time to lose. The European standards are effective in 2012.
Unlike the desperation move at Chrysler, the BMW decision is not a sign that the company is in trouble. It’s a sign that the company is being ultra realistic about exactly what it has to do in order to remain competitive in the future, and isn’t afraid to do what it takes to achieve its goals.
The move, however, seems certain to add to speculation that BMW will sooner or later seek further cooperation and/or consolidation with Daimler. Both companies are believed to need outside help to finance the costs of meeting the new standards, developing new models, and of competitive expansion into emerging markets. Both are thought to be able to achieve significant economies of scale by cooperating with the other because their products and product lines are so similar.
BMW, however, seems to be moving more aggressively than Daimler, at least on the issue of costs. Daimler, of course, has had Chrysler on which to blame past profit problems. Divesting Chrysler has increased earnings dramatically. There is, however, reason to question whether Daimler has bigger problems than it has been publicly prepared to acknowledge. After all, the same folks that ran Chrysler into the ground are still running the show at Daimler.
If so, the BMW move may also be seen as a bit of pre-positioning, so that if and when the need and or opportunity to reach an equal alliance with Daimler should eventuate, it will be BMW that is the one that is more equal than the other.