From 1 September, Daimler Truck has reduced working hours at its plant in Wörth near Karlsruhe, the largest truck factory in the group's production network. Around 10,000 employees work there. It has now been decided that half of them will be affected by short-time working, initially limited to six months, according to a Daimler Truck spokeswoman. The measure will be used flexibly, and only at the Wörth site.

The reason for the reduced working hours is the sluggish demand for trucks in Europe. The Board of Management of Daimler Truck had hoped for an upturn in the second half of this year. But at the beginning of August, Group CEO Martin Daum had to admit that "the market will remain weak until the end of this year.“

Sales of Mercedes-Benz trucks in Europe fell by around 40% in the second quarter of this year. The German market, in particular, is weak, which is hitting Mercedes-Benz hard. The brand's market share in its home region is twice as high as in other European countries.

Of course, the competition is also feeling the effects of the overall economic slowdown. Traton, Volkswagen's commercial vehicle holding company, reported a 9% drop in sales for Europe in the first half of the year, with incoming orders down by as much as 28%. MAN, one of Traton's four brands, is also suffering from the slump in Germany, its most important market, with a drop in truck orders of around a third. „Customers are becoming more cautious, especially in Europe and the USA,“ commented Christian Levin, CEO of Traton, on the latest figures.

MAN has been adjusting capacity in Munich, and at the Polish plant in Krakow, for some time, a spokesperson for the Munich-based company explained. All types of flexibility measures, including working time accounts, were used at an early stage. Short-time working is in place at the Munich plant – as will soon be the case at the Mercedes-Benz site in Wörth. This does not apply to all employees, though the spokesperson did not provide any details, saying only "we are currently producing at a significantly reduced level.“ During the summer break, production was shut down for three weeks anyway.

In order to win more orders, MAN says it has „developed a bundle of sales-promoting measures“. Customers are being targeted. However, manufacturers are endeavouring to keep prices stable in order to pass on the increased costs to their customers. Margins are already under pressure due to weaker capacity utilisation.

Swedish competitor Volvo describes the development in Europe as normalisation. The mountain of orders that the industry had accumulated over the past three years, mainly due to bottlenecks in the supply chain, has largely been cleared. In addition, transport volumes have decreased due to the economic downturn. „Large fleets are continuing their replacement purchases,“ according to Volvo's half-year report. Smaller customers, however, were reluctant to place orders.

Volvo reacted quite early to the normalised demand. The company had already started to adjust capacity in Europe in November, CFO Mats Backman said recently. After further changes in the first quarter, demand and capacity were back in balance during the second quarter.

The Board of Management of Daimler Truck is determined to combat the weakness in Europe. Despite a strong recovery in South America, the margin for Mercedes-Benz brand trucks, which focus on sales in Europe and Brazil, fell to 6.5% in the second quarter. In the previous year, it was 9.8%. „We are not satisfied with that,“ said Daum.

Three years ago, before the IPO in December 2021, he promised investors that he would raise the profitability of all Daimler Truck segments to an impressive level compared to the rest of the industry. Margins were to remain relatively high even in phases of a weak economy.

The reduced working hours in Wörth have generally been met with understanding on the part of employees. „Now that the working time accounts in Wörth are already in the red, short-time working is the next logical step,“ says Michael Brecht, Chairman of the General Works Council at Daimler Truck.

In the event that other sites also have to go into short-time working, the same conditions have been agreed for all. However, Brecht is already looking ahead to better times, saying that "it is important that we weather this phase, and can step on the gas again when demand picks up.“

In an interview with the Börsen-Zeitung in June, the head of the works council pointed out the high level of flexibility and emphasised that „Daimler Truck does not have a structural problem.“ At that time there was some anxiety among the workforce. However, the ups and downs of the economy are nothing new for many. „We have to get through the downturn,“ says Brecht.

In addition to flexible working hours, Daum also points to other ways of reducing expenditure. For example, the cost of energy and logistics. The material flow can be optimised. The current situation is making it more difficult for the company to achieve one of its targets: Fixed costs are targetted to be 15% lower next year than in 2019. „That is more than challenging,“ said CFO Eva Scherer, who has been on the Management Board since April. A reduction of 6% by 2023 was achieved. Scherer will explain in November how the 15% target is still to be achieved.