DaimlerChrysler AG will cut 6,000 administrative jobs, or one-fifth of its worldwide total, to save more than a billion dollars a year and make the big automaker leaner and simpler to run, the company said Tuesday.

CEO Dieter Zetsche said the streamlining, most of which would occur in Germany, would help boost growth and profits, and focus the company more closely on core production activities. He said it would remove management layers and improve cooperation between its divisions, especially Mercedes and Chrysler.

"Our objective in taking these actions is to create a lean, agile structure, with streamlined and stable processes that will unleash DaimlerChrysler’s full potential," said Zetsche. "We’re going to build on a strong product portfolio." In 2005 alone, DaimlerChrysler launched 17 new products, giving it one of the youngest product lines in the automotive industry. The company plans to continue its aggressive level of investment. 

Administrative staff would be cut 20 percent over three years, saving some $1.2 billion a year, the company said. The cuts would cover areas such as accounting, auditing, personnel and strategic planning. The downsizing would cost the company around $2.4 billion in restructuring costs from 2006 to the end of 2008.

 The plan envisions elimination of administrative jobs that duplicate work at the corporate and production level, the company said. Underlining its emphasis on a sharper focus onm manufacturing functions, top management will leave the landmark office tower in the Moehringen district of Stuttgart and move to offices at the production facilities in the city’s Untertuerkheim district in order to be physically closer to the assembly line.

The company’s other headquarters will remain in Auburn Hills, Mich.

Cooperation between the Mercedes Car Group and the Chrysler Group will become markedly closer, according to Zetsche, but "a clear priority within this effort will continue to further strengthen brand identity. You can expect to see more examples of collaboration especially when we can transfer knowledge between the groups, much as Chrysler Group tapped the rear-wheel-
drive expertise of Mercedes-Benz in the development of the Chrysler 300C."

 "Beyond that," added Zetsche, "you will also see more examples of clearly defined ’project houses’ where engineers from different divisions work together for the benefit of the whole company." A current example is the joint project to develop hybrids, where Mercedes-Benz and Chrysler engineers are working side-by-side (with General Motors and BMW specialists). This
joint team is creating a new two-mode hybrid system that will power future vehicles from the brands of both divisions. A second example is the collaboration on the world’s cleanest diesel technology called BlueTec, between Commercial Vehicles, Mercedes Car Group, and Chrysler Group.

The company noted that the management board itself has shrunk from 12 to nine members with already-announced changes including Zetsche’s decision to combine his duties as top boss with running the company’s Mercedes group. Zetsche headed the U.S. Chrysler division and then Mercedes before taking over the top job from Juergen Schrempp on Jan. 1.

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