By Rob Morris
EXCLUSIVE: Luxury car maker says no to compulsory losses despite slowdown.
Car manufacturer BMW has insisted there will be no compulsory redundancies in the Middle East this year.
Phil Horton, managing director of BMW Middle East, told Arabian Business that the company shed three people from its workforce, which now numbers 32, last year through “natural wastage”.
He added there are no plans to reduce the workforce further in 2009. “We run a very small operation in the Middle East anyway because our business model works through importing,” he said.
In September 2007, BMW announced worldwide redundancies to cut staff numbers by 8000. According to Horton, the process was completed by last year’s third quarter.
“We’re not a big operation here and at the beginning of last year as part of the worldwide 8000 we were also able through natural wastage to reduce our headcount here by almost 10%,” he added. “We did that last year, so we are not forecasting redundancies.”
The company has also cut worldwide production by 60,000 units, with further revisions expected this year. “What we don’t want is to have a mountain of vehicles all around the world,” Horton said. “Our strategy is to try and match the production to the demand, which is tricky.”
Last year, the company sold 15,059 BMWs and MINIs through 14 importers in this region. But Horton admitted the Middle East operation, which increased sales by 5 percent in 2008 compared to the previous year, would be satisfied with no growth in 2009.
“It’s clearly going to be a challenging year,” he said. “We finished last year 5 percent up and would have done better had it not been for the financial crash in the last quarter, which hit BMW and most, if not all, manufacturers pretty hard.
“Last year, we had one of our best selling cars in the region, which is the 7 Series, so we were quite happy with the 5 percent. If we can get to the same position overall in 2009 as we did in 2008, right now I would be very happy with that.
“I would probably be happy right now with 0 percent growth,” he added.
Local banks’ reluctance to finance car purchases has hit the automotive industry hard in recent months, according to Horton. But he is confident funding will soon be more readily accessible.
He said: “We have some strong cars that people want to buy and as soon as the banks start lending money, which I believe will happen in the first quarter, then we know demand is there.
“We know people are still going into the showroom in good numbers; the problem is they get turned down by banks for a loan. That’s the key for me and I am optimistic the governments will continue to encourage the banks or they will see it in their own interests to start lending.”
No job cuts, good for you, what about price cuts for parts and labour for those who have bought already, your extortionate compared to the uk for service and parts. EVEN WHEN YOU HAVE CHEAPER LABOUR.
Its a sad day when an MD refers to terminations of his employees, however few, as "natural wastage". Indicates to me that the operation was not optimized to begin with. Unusual for a german organisation, maybe local management was too optimistic and should also be culled as "natural waste"
Overpriced cars, overpriced maintenance, unmotivated sales staff.... Curious how this will work now that Disneyland is crumbling.
To everyone who is asking for a reduction in parts, maintenance labor costs, i think there will be a rude awakening..... this is just not the way companies here work! I have been here 27 years and i can tell you that these companies are now going to INCREASE the above to maintain or atleast get close to their profit marks!! There is little or no sensitivity to the customer requirements here. Most of the nice things said by these executives are just words. They do not mean any of it. Fact of the matter is, they do not care what the customer thinks or feels, coz they know end of the day the customer will pay!! So this is what they do...pickup a good marketing book, plagiarize some dribble about customer care and continue with existing practices. Good luck Guys...
"Pick up a good marketing book"??? No, i can just go to the service centre behind nissan showroom that deal with BMW's and get a far better service, personal touch, and a better price, i don't need a book for that. Maybe if you lift your head up out of the paper you might see an alternative solution that comes with a better out come on your own. It's the rip off merchants that are going to get a rude awakening when people start to shop around now. We won't just take it any more.
Sad enough to hear a MD talk about his staff as "natural wastage", even more so if you've seen the whole executive bunch on an "incentive" trip to Switzerland which surley cost more than the combined year's salary of all the people made redundant! Sad development!