Porsche to maintain its profit margins by reducing labor hours required to produce a vehicle

Article by Christian A., on December 15, 2012

Porsche is aiming to maintain its industry-leading profit margins by reducing the number of labor hours needed to produce a vehicle. In a statement, Porsche said that by the middle of 2013, the 3,300 workers at its car plant in the Zuffenhausen district of Stuttgart, Germany, will work 34-hour weeks, an hour shorter than at present, while having the same vehicle output.

In addition, the measures are meant to draw potential employees. At a press conference at Porsche's headquarters in Stuttgart, CEO Matthias Mueller described it as a “win-win situation” since the company as well as its employees benefit.

New models such as the Macan compact SUV and an updated version of the Cayman sports car are included in Porsche's plan to sell 200,000 vehicles annually by 2018, a 71% increase from last year. The division posted an operating profit of 389 million euros ($508 million) in the nine-month period on revenue of 2.17 billion euros, leading to an 18% margin.

In comparison, BMW posted an automotive margin of 9.4% and the VW brand reported 3.6%. At the press conference, Thomas Edig, the company's personnel chief, said that engineers at Porsche's research and development center in Weissach, Germany, could now work as short as 40 hours a week, and working times can be adjusted depending on individual needs. Edig added that Porsche will become more flexible due to these operational agreements.

He said that the company wants to be more profitable and the board is certain that this agreement will help it to be prepared for the market environment of the future. According to Uwe Hueck, head of Porsche's works council, the automaker’s productivity will probably get a boost from the agreement, which is effective until 2016.

While luxury carmakers like Porsche, BMW and Mercedes-Benz have defied a drop in sales that has weighed down mass-market companies like Fiat, PSA/Peugeot-Citroen and Renault, Porsche said last September that it plans to produce fewer than the 155,000 vehicles originally planned for 2012. The brand continues to have plans to have a higher output than last year, with 140,000 vehicles expected to be built in its plants in 2012.

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