MAN Commercial Vehicles zeroes in on costs

Chairman asking for 150 million euros in savings. Could there be agreement with the works council by the summer break?

Munich. Anton Weinmann, chairman of MAN Commercial Vehicles, wants to reach a deal with the firm's works council and the IG Metall union on cost-cutting measures by the end of July, the start of the summer holidays.

In March, Weinmann announced that he wanted to save 100 million euros at 10 MAN factories in Germany and Austria.

Meanwhile, he has presented union representatives with the "outline for general cost reductions" that is now under discussion.

"We have set a 6.5 percent return on sales as the goal to reach by 2007," said Weinmann in an interview. "To do that, we need to improve our performance by 150 million euros."

The firm's return on sales in 2004 was 4.6 percent. About 5.6 percent is expected this year.

Weinmann wants to save 100 million euros by trimming salary costs in vehicle assembly and improving productivity.

The remaining 50 million euros in savings is expected to come from a streamlined international sales organization, as well as from improvements in MAN products.

The truck and bus manufacturer employs 34,000 workers worldwide, with 21,000 in Germany and 4,500 in Austria. Some 70 percent of its work force is based in German-speaking countries.

"But we are only getting about 40 percent of our sales there," Weinmann said. "That means our employees are over-proportionally located in Germany and Austria."

The total number of employees in German and Austrian factories can only be maintained if wage costs are reduced and competitiveness is further increased.

He is sticking to his plan to cut 87 jobs from the Pilsting assembly plant in Bavaria, part of MAN's Neoplan bus subsidiary.

Weinmann, who moved into the top job at MAN Commercial Vehicles earlier this year, says the company needs to be positioned better globally to boost its sales in the long term.

His goal is sales of 100,000 trucks and 10,000 buses annually by 2010.

By comparison, the company sold 63,348 trucks and 6,062 buses worldwide in 2004. Totals for this year should be up by at least 3,000 vehicles.

Annual sales should climb to 7.8 billion euros this year from 7.4 billion in 2004.

As sales in MAN's biggest market, western Europe, are stagnating, Weinmann wants to aggressively expand business in eastern Europe. He sees the greatest potential in Hungary and Poland.

In mid-June, the company is expected to decide which eastern European country will get a planned truck factory. The Polish city of Stacharovice is considered the front-runner despite poor transportation connections.

MAN has yet to gain traction in China, where competitors sell cheaper, technically less sophisticated vehicles, Weinmann said. "In the mid term, we want to play a bigger role in China. And we will."

He also has Middle East markets in his sights. In Iraq, Iran and Kuwait, talks are under way on possible avenues for sales and distribution.

Expansion in Latin America is also planned.

"Together with our sister company Ferrostaal, we have begun selling buses in Mexico," he said. "A pilot project has been highly successful. So now we want to carry it over to the truck business."

After winning a 1.5 billion-euro contract from the British Ministry of Defence in April, MAN officials now see a good chance of reeling in other military business. Australia's Department of Defence has just made up its list of possible contractors, among them MAN Commercial Vehicles.

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