DAIMLER-BENZ Aerospace (DASA) fears another year of heavy losses unless the steady slide in US dollar-exchange rates begins to improve. The group raises the spectre of moving work out of Germany if the situation does not improve.
DASA had promised to be back in the black by 1995, but those forecasts may now be in jeopardy warns Manfred Bischoff, DASA finance chief and chairman designate, revealing that the group netted losses of DM438 million ($322 million) in 1994.
Bischoff warns that, if the dollar stays at its present record low of DM1.36, DASA would again suffer "considerable losses" in 1995. The group would have to see a rapid recovery to the previous DM1.60 level to achieve its target of returning to profit, he adds.
Bischoff says that DASA is being forced to think of shifting its real net output from Germany and the Netherlands, endangering at least 10,000 jobs and Germany's status as a high-technology centre.
Outgoing DASA chairman Jurgen Schrempp, who is now stepping up to head the parent Daimler-Benz group, describes the dollar-exchange rate as "a threat to the aerospace industry and therefore to Germany as a high-tech location".
He urges the start of a public dialogue within Germany to resolve the potential crisis. A working group has already been formed, which will report on possible solutions by October.
"We are as determined as ever to keep this industry in Germany, but it is clear that we cannot do that without help," says Schrempp. DASA says that it is especially exposed to exchange rates, with 74% of sales from its aircraft and propulsion businesses made in dollars offset against dollar costs of only 27%.
Despite the exchange-rate problem and a 6.5% dip in sales to DM17.4 billion, Bischoff points out that DASA still managed to make substantial inroads into its losses, which had run to DM694 million in 1993.
Bischoff says that the improved performance came through "sustained" cost cutting, including the six site closures and 13,000 redundancies outlined in the restructuring plan at the end of 1993.
The biggest losses in 1994 came from the aircraft division, which posted a deficit of DM398 million as sales fell by more than 15%. Defence and civil systems lost a further DM103 million, despite a 7% increase in sales, and propulsion systems lost DM87 million.
Space systems maintained a profit of DM77 million.
Source: Flight International
