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Daimler posts dire loss and cuts wages

German luxury car and truck maker Daimler posted a stiff first-quarter loss Tuesday and warned sales would "decrease significantly" this year. Some 60,000 workers will also see their wages cut by nearly 9 percent.

Daimler posts dire loss and cuts wages
Photo: DPA

Daimler said it had suffered a net loss of €1.28 billion ($1.66 billion), against a profit of €1.3 billion in the same period a year earlier.

Sales fell 25 percent in the first three months of 2009 to €18.7 billion, while the group’s operations showed a loss of €1.42 billion, a statement said.

“The Daimler Group’s total revenue is likely to decrease significantly in the full-year 2009” from the previous year’s level of €95.9 billion, it added. And “earnings in the second quarter are expected to be significantly negative once again,” Daimler said.

Shares in the automotive group plunged by 5.40 percent to €25.90 in midday trades on the Frankfurt stock exchange, while the DAX index of German blue-chips was off by 2.57 percent overall.

Like other auto groups, the maker of Mercedes Benz cars and trucks has been slammed by the global collapse of automobile markets.

Daimler said it had “initiated measures designed to adjust costs and avoid expenditure across all divisions” and at its headquarters in Stuttgart, southern Germany.

The plan should provide cost savings of €4 billion a year, said Daimler, which employed 263,819 people at the end of March.

Daimler boss Dieter Zetsche recently refused to rule out job cuts at the company, which suffered from “sharp drops in unit sales at Mercedes-Benz Cars, Daimler Trucks and Mercedes-Benz Vans in the first quarter of 2009.”

But 60,000 workers already putting in shorter hours would no longer be compensated for the 8.75 percent reduction in time on the clock.

The automotive division nonetheless expected to post positive earnings in the second half of the year, the statement said. Daimler said it had earned €449 million from the sale of property at Berlin’s Postdamer Platz, and €102 million from the transfer of shares in the European aeronautic group EADS.

But the group also booked charges of €491 million in connection with its holding in the distressed US car maker Chrysler, a former Daimler division. Another $700 million in charges was expected before Chrysler was finally separated from Daimler’s books.

On Monday, Daimler said it would give up its 19.9 percent stake in Chrysler and forgive outstanding loans from the struggling firm, which must draw up a viable plan this week to continue receiving US government support.

Looking ahead, Daimler said it would launch its “smart” city car in China and Brazil this year, but that in general, “lower volumes are anticipated above all in the markets of the United States, Western Europe and Japan.”

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CARS

From lizards to water, eco-bumps snag Tesla’s giant Berlin car factory

In the green forest outside Berlin, a David and Goliath-style battle is playing out between electric carmaker Tesla and environmental campaigners who want to stop its planned "gigafactory".

From lizards to water, eco-bumps snag Tesla's giant Berlin car factory
Tesla's gigafactory outside the doors of Berlin. dpa-Zentralbild | Patrick Pleul

“When I saw on TV that the Tesla factory was going to be built here, I couldn’t believe it,” said Steffen Schorch, driving his trusty German-made car.

The 60-year-old from Erkner village in the Berlin commuter belt has become one of the faces of the fight against the US auto giant’s first European factory, due to open in the Brandenburg region near Berlin in July.

“Tesla needs far too much water, and the region does not have this water,” said the environmental activist, a local representative of the Nabu ecologist campaign group.

Announced in November 2019, Tesla’s gigafactory project was warmly welcomed as an endorsement of the “Made in Germany” quality mark – but was immediately met with opposition from local residents.

Demonstrations, legal action, open letters – residents have done everything in their power to delay the project, supported by powerful
environmental campaign groups Nabu and Gruene Liga.

Tesla was forced to temporarily suspend forest clearing last year after campaigners won an injunction over threats to the habitats of resident lizards and snakes during their winter slumber.

READ MORE: Is Germany’s Volkswagen becoming ‘the new Tesla’ as it ramps up e-vehicle production?

And now they have focused their attention on water consumption – which could reach up to 3.6 million cubic metres a year, or around 30 percent of the region’s available supply, according to the ZDF public broadcaster.

The extra demand could place a huge burden on a region already affected by water shortages and hit by summer droughts for the past three years.

Local residents and environmentalists are also concerned about the impact on the wetlands, an important source of biodiversity in the region.

Tesla Street

“The water situation is bad, and will get worse,” Heiko Baschin, a spokesman for the neighbourhood association IG Freienbrink, told AFP.

Brandenburg’s environment minister Axel Vogel sought to play down the issue, saying in March that “capacity has not been exceeded for now”.

But the authorities admit that “the impact of droughts is significant” and have set up a working group to examine the issue in the long term.

The gigafactory is set to sprawl over 300 hectares – equivalent to approximately 560 football fields – southwest of the German capital.

Tesla is aiming to produce 500,000 electric vehicles a year at the plant, which will also be home to “the largest battery factory in the world”,
according to group boss Elon Musk.

In a little over a year and a half, swathes of coniferous forest have already been cleared to make way for vast concrete rectangles on a red earth base, accessed via the already iconic Tesla Strasse (Tesla Street).

German bureaucracy

The new site still has only provisional construction permits, but Tesla has been authorised by local officials to begin work at its own risk.

Final approval depends on an assessment of the project’s environmental impact – including the issue of water.

In theory, if approval is not granted, Tesla will have to dismantle the entire complex at its own expense.

But “pressure is being exerted (on the regulatory authorities), linked to Tesla’s significant investment”, Gruene Liga’s Michael Greschow told AFP.

In early April, Tesla said it was “irritated” by the slow pace of German bureaucracy, calling for exceptions to the rules for projects that help the environment.

Economy Minister Peter Altmaier agreed in April that his government “had not done enough” to reduce bureaucracy, lauding the gigafactory as a “very important project”.

Despite Germany’s reputation for efficiency, major infrastructure projects are often held up by bureaucracy criticised as excessive by the business community.

Among the most embarrassing examples are Berlin’s new airport which opened last October after an eight-year delay and Stuttgart’s new train station, which has been under construction since 2010.

Brandenburg’s economy minister, Joerg Steinbach, raised the possibility in February that the Tesla factory could be delayed beyond its July planned opening for the same reason.

SEE ALSO: Tesla advertises over 300 jobs for new Gigafactory near Berlin

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