Works council head at Germany's Daimler Truck queries savings targets

The long-term savings goals of Daimler Truck are unrealistic and should be rethought along with plans to relocate some production abroad, according to the head of the German vehicle builder's works council.

"If you set yourself targets, then the targets must be ambitious, but ultimately also achievable," Michael Brecht said at the company's headquarters in Leinfelden-Echterdingen near the southern German city of Stuttgart.

Inflation and other factors had overtaken plans to reduce fixed costs, investments and spending on research and development by 15% by 2025 compared with 2019, said Brecht: "I don't think it's realistic to expect this figure to be achieved like this."

The company aims to move some of its production from Germany to countries with lower costs, such as Romania. However, there should be a review of actual production processes rather than locations in order to optimize efficiency, said Brecht, who represents the workers in his role as works council boss.

He nevertheless commended the company's recent performance, citing the 9.8% operating margin in the firm's industrial business. "A few years ago, we would have given anything to achieve something like that," he said.

There should be significant additional investment in areas like research and development, said Brecht, who has long called for the company to produce its own battery cells in Germany.

Daimler Truck recently announced plans to produce battery cells with partners in the US in order to capitalize on the Inflation Reduction Act (IRA), a huge US subsidy programme.

Without subsidies, it would be difficult to establish a battery cell factory in Germany, compared with the example of Hungary, where it is easier to obtain funding, Brecht said.

He also criticized the German government's debt brake, a constitutional measure that limits the amount of debt the state can take on. In view of its comparatively low debt ratio at the moment, Germany could potentially allow more debt in the future to help build up technologies and infrastructure that can compete globally in the long term.

Looking at the financial year ahead, Brecht said it would be a "little rougher overall" and that the successes of 2023 could not simply be carried over to 2024.