updated 7/22/2004 10:15:28 PM ET 2004-07-23T02:15:28

DaimlerChrysler reached a cost-saving deal with its German workers early Friday, a union spokesman said, after contentious talks marked by a week of protests and brief work stoppages.

Labor and management “have agreed on the substantial outlines of an agreement,” Frank Stroh, a spokesman for the IG Metall industrial union, said after a bargaining session that lasted into the early hours.

Stroh declined to give details ahead of a news conference scheduled for later Friday.

As talks progressed, employee representatives had offered some $245 million in savings, mostly through relinquishing a pay raise. The company’s demand was for $612 million in cuts to annual costs, saying that otherwise it will have to move production of its Mercedes C-Class cars away from the factory in Sindelfingen, near Stuttgart.

A main sticking point had been employee demands that the company guaranteed jobs for longer than four or five years.

The company says the Sindelfingen workers have perks such as five minutes of accumulated paid break time per hour and higher premiums for later shifts than workers at German plants elsewhere. It has threatened to move the C-Class work to plants in Bremen, Germany, and East London, South Africa, where costs are lower — a move that would wipe out 6,000 jobs at Sindelfingen.

At odds over Mercedes
Employees had been holding out for more than a guarantee the company won’t move production of the Mercedes C-Class to cheaper plants in 2007. They are seeking to lock in work for the longer term.

Tens of thousands of DaimlerChrysler workers across the country have staged protests, which they had said would escalate if no agreement can be reached.

DaimlerChrysler pressing for cost cuts at its luxury Mercedes division, an earnings mainstay for the past several years, as it comes under increasing sales pressure from a slew of new models from German competitor BMW.

Other big German industrial firms press for similar concessions. Engineering giant Siemens AG achieved what is widely viewed as a groundbreaking deal by getting workers at phone repair facilities in northern Germany to work 40 hours rather than 35 for no added pay. The 35-hour week was won through a 1984 strike by the industrial union IG Metall, and union leaders have been highly critical of proposals to give it up.

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