Mercedes 2006 Annual Report Download - page 51

New management model
On January 24, 2006, DaimlerChrysler presented a new manage-
ment model with the aim of improving the Group’s competitiveness.
The model is designed to further integrate the Group’s functions,
focus operational areas more closely on their core processes, and
encourage internal collaboration. It is also intended to reduce
the duplication of activities in administrative areas.
The structural changes include the consolidation and integration of
all administrative functions, such as Finance and Controlling,
Human Resources and Strategy. Each of these functions will be
centralized and will report to the Board of Management member
responsible for the respective function throughout the Group.
The duplication of activities between the corporate level and
the operating level will be eliminated, thereby reducing complexity
within the Group. The integration of administrative functions
will result in shorter, faster and leaner reporting channels and
decision making.
In March 2006, the Commercial Vehicles division was renamed
as the “Truck Group”, and since then has focused on its core
business of producing and selling trucks; bus and van activities are
directly managed as separate units within the new segment
“Van, Bus, Other”. The new structure allows a stronger orientation
towards customers’ specific requirements in these market
segments. Due to the commonality of powertrains and components,
the Bus unit will report to the head of the Truck Group and
the Van unit will report to the head of the Mercedes Car Group.
In order to react faster to changing market conditions, we have
more closely integrated the organization of our research,
predevelopment and development departments and pooled their
resources. Responsibility for product development at the
Mercedes Car Group has been integrated into the newly created
Board of Management area “Group Research and Mercedes
Car Group Development”, which acts as a research competence
center for the entire DaimlerChrysler Group. In addition to
its responsibility for the products of the Mercedes Car Group,
it is increasingly taking on predevelopment work for all the
automotive divisions.
Furthermore, the location of the Group’s headquarters
in Germany has been transferred from Stuttgart-Möhringen
to Stuttgart-Untertürkheim.
With the implementation of the new management model, we intend
to reduce our administrative expenses by an average of €1.5
billion each year. €0.5 billion of this total will be addressed by
other programs, such as CORE at the Mercedes Car Group.
In order to achieve the goals of the new management model,
personnel capacities are also being adjusted. This will lead to a
total reduction of up to 20% in the number of persons employed
in administrative departments during the years of 2006 through
2008, equivalent to approximately 6,000 jobs worldwide.
The implementation of the new management model is running
according to plan. Most of the planned reductions in management
positions had already taken place by the end of 2006. On July 18,
2006, we reached an agreement with the Group Employee Council
on the details of the settlement of interests for employees
paid according to external wage tariffs. We have been working with
the new structures since August 1, 2006 and have achieved
substantial efficiency gains as a result.
The total expenditure for the implementation of the program
in the years 2006 through 2008 is likely to be in the region of €2
billion. Of this total, €393 million was incurred in the year 2006.
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