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Mercedes' costs to soar 50%?

NEWS STORY
18/11/2009

One of Mercedes' most decorated figures has launched a blistering attack on the car company's decision to buy into Brawn GP and, according to Pitpass' business editor Chris Sylt, it's easy to see why when you delve deep into the investment required.

On Monday Mercedes and Abu Dhabi wealth fund Aabar announced that they will acquire 75.1% of Brawn GP from its boss Ross Brawn with Daimler taking a 45.1% stake and Aabar holding 30%. The deal will also see Mercedes sell its 40% stake in McLaren to the team's co-owners the Bahrain wealth fund Mumtalakat, entrepreneur Ron Dennis and Saudi tycoon Mansour Ojjeh. The driving force behind the deal is believed to have been Dieter Zetsche, chairman of Mercedes' owner Daimler, and it has now come to light that he didn't have support from all the company's top brass.

"We cannot understand why the board of directors has immediately started a new Formula One project," said Erich Klemm who is deputy chairman of Daimler's supervisory board as well as being chairman of Daimler's group works council, chairman of its European works council and chairman of its world employee committee. In short, Klemm is a union man and at a time when car companies are laying off staff he knows only too well that it doesn't look prudent to burn money on buying a new F1 team.

"In the (car) factories, every cent is being turned over three times. The employees are feeling the financial crisis with shorter working hours and loss of income," he said, adding that "in these economically difficult times, the company should invest in better marketing of its real cars."

Ouch! Just in case anyone missed his point, Klemm summed it up succinctly by saying that the car company's "exit at McLaren-Mercedes was a chance to completely leave the costly and controversial circus."

In his role as deputy chairman of Daimler's supervisory board, Klemm's duty is to check the actions and decisions of the management board and one wonders whether he might press for a U-turn on the Brawn acquisition if there is any possibility of doing so. It might be logical given the increased sum that Mercedes spent on this year's F1 season, let alone the higher amount which it might need to pump into Brawn.

As Pitpass reported last month, Mercedes increased spending on its F1 engines by 22% to £96.1m in 2008 as it developed this year's powerplants for McLaren. This of course is despite there being an engine freeze. To make matters worse, Mercedes' efforts were in vain since McLaren failed to retain its title.

As if this wasn't bad enough, the increased spending was largely down to development of the Kers energy recovery technology which the teams have agreed not to use next year so Mercedes' money literally went up in smoke. To cap it all, its engine division's highest-paid director, believed to be managing director Sten Ola Kallenius, got a nice pat on the back as his pay rocketed 44% to £630,000. No wonder Klemm wanted Mercedes out of F1.

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