Daimler-Benz to Cut Production Costs

The giant West German Daimler-Benz group, which registered healthy profits in 1989, will cut production costs and possibly lay off workers to prevent risking “all healthy jobs,” the group’s chairman said Wednesday.

The company reported $2.72 billion in pretax profit in 1989, the highest of any German company, Chairman Edzard Reuter told 9,500 shareholders at the company’s annual meeting.

Daimler needs to cut costs to counter declining orders from defense contractors caused by moves to disarm in the East and the West, Reuter said.

He said Daimler may have to cut jobs too “if we don’t want to end up having to risk the healthy jobs.”

Daimler-Benz AG employed about 368,000 people in 1989. It reported group sales up by 4% to $46.3 billion.

Deutsche Bank AG owns 28.1% of Daimler stocks, Mercedes Automobil Holding AG holds 25.23%, Kuwait owns about 14% and some 300,000 shareholders have about 32%.

At the meeting, Reuter vehemently defended Daimler’s recent merger with Messerschmitt-Boelkow Blum, West Germany’s largest military weapons producer, and its acquisition of Deutsche Aerospace as commercially sound operations.

He said Daimler did not acquire arms-producing companies to make money off the formerly crisis-resistant defense sector, but to use their commercial potential.

“We never counted on increasing business in defense technology,” Reuter said.

Daimler has always been interested in “the extraordinarily promising technological and commercial opportunities in the aerospace industry,” he said.