Cost-Cutting Package
Outline
1. Current Situation
2.Goals
3. Cost-Cutting
4.Productivity Forecast
5.Action Plan
Current Situation
 Production costs are 40% higher
Goals
• Increase productivity
• Boosts profits by 4 billion euros
• Cut costs by 7 billion euros
• Increase competitiveness
 Become one of the world leading car manufacturers
Cost-Cutting at EA
• Five-day week and standard salaries
• Lean manufacturing
•  Process improvement
• Option A: Open a factory in India
• Option B: Purchase spare parts from China
Per cent
Age of employees
90
80
70
60
employees > 55
50
employees < 55
40
30
20
10
0
year 1
year 2
year 3
Cost cutting plan
Goal: Reduce costs by 7 billion
labour costs
1bn.
savings by improved
sales
saving in improved sales
others
reducing suppliers
costs
2bn.
reducing suppliers costs
labour costs
others
2bn.
Productivity Forecast
Productivity
120
100
Productivity
80
60
40
20
0
Year 1
Year 2
Year 3
Year 4
Action Plan
1) Implement lean production
2) Reduce salaries
3) Renegotiate prices with suppliers
3) Reduce number of senior employees
4) Job cuttings (If necessary)
 7 Billion Euro savings are possible!
Thank you for your attention!