Weak dollar threatens Mercedes jobs

JOBS could be lost at car maker Mercedes-Benz in Europe if the dollar continues to fall against the euro.

Manfred Gentz, chief financial officer of Mercedes parent company Daimler-Chrysler, told analysts in Detroit that the weak currency could have a major impact on earnings at Mercedes-Benz this year and the company could be forced to move jobs to the US.

'The impact of the weaker dollar will be rather limited in 2004 because we have a high degree of hedging,' Gentz said. 'If that continues in 2005, at the same level, there will be a major impact as far as earnings for Mercedes-Benz are concerned.'

Mercedes is already doubling production at its plant in Alabama that makes sport utility vehicles to add a six-passenger vehicle, and more US production could be ramped up.

The warning is a bad sign for the entire company, which has regarded Mercedes as its major earnings driver.

Chrysler, which has shed more than 35,000 jobs in a turnaround plan, is struggling for market share and might not break even for 2003.

The turmoil could also hasten a global repositioning of the company, although Gentz said Daimler-Chrysler had no intention at present of increasing its 37% stake in Mitsubishi Motors.

Daimler-Chrysler has repeatedly said it would make no move until the Japanese firm sorts out its balance sheet, although Gentz confirmed that he was considering a future 'capital increase' in Mitsubishi. 'There is a discussion of a capital increase which may make sense, but there is no decision yet,' Gentz said.

.