Germany's MAN SE (MANG.DE) could cut as many as 2,000 jobs at its main trucks division as the Volkswagen-owned (VOWG_p.DE) company slims operations under a wider reorganization of production, company and union sources said.
Management and union officials at MAN have been in talks for months on how to reshuffle truck production to achieve planned savings of more than 600 million euros ($676 million) by 2017 to make it more efficient as parent VW pushes to become a global force in trucks.
VW, Europe's largest vehicle manufacturer, has spent billions of euros over the past decade on expanding stakes in MAN and Scania to fulfill a long-standing ambition to compete with truck market leaders Daimler (DAIGn.DE) and Volvo VOLVbST.
But it has yet to reap significant cost savings from the combination and last month aligned MAN and Swedish peer Scania in a new truck holding company.
The new strategy foresees abandoning truck production at MAN's plant in Salzgitter in northern Germany, where about 2,500 people are employed, and converting the site into a component factory, the sources said.
Assembly of heavy trucks would be concentrated at the main factory in Munich, and light and medium-sized trucks would be built in Styria, Austria, they said.
The reshuffle will entail heavy investment in MAN's truck-making facilities, company sources said, without being specific.
MAN employs 15,000 workers in Germany, almost half its 34,000-strong global labor force.
"The key question is: How can we better use our production capacities?" Markus Vogl, works council chief at MAN Truck & Bus's Austrian operations, told Reuters.
"We have more capacity than we currently need. The question is how to position ourselves sensibly."
The talks between MAN's management and union representatives are ongoing and will probably conclude next week, one of the labor sources said.
MAN and parent VW declined comment.
Management and union representatives aren't seeking outright job losses, both company and union sources said.
Instead, the headcount could be lowered through voluntary redundancy, early retirement as well as reassigning staff to other roles within VW, they said.
MAN, which VW fully integrated into its multi-brand group in 2013, has long suffered from languishing profitability and high fixed costs.
"VW must become faster, more flexible and nimble," Chief Executive Martin Winterkorn told a staff gathering at Wolfsburg headquarters on Wednesday. "We are trying to get better in all areas where we are still underperforming."
Andreas Renschler, head of VW's new truck holding company, wants to boost the operating margin at MAN's truck operations to at least 6 percent, from 1.8 percent in 2014, Germany's Manager Magazin reported on Wednesday, citing sources.