Mercedes-Benz halts new investment in German plants, considers closures

The Stuttgart carmaker is temporarily halting all further investment at its German sites. Possible plant closures are looming, increasing pressure on staff, works council and IG Metall. Volkswagen and Audi have also announced major savings programmes. The future of Mercedes-Benz's production sites in Germany is coming under increasing pressure. Because of high labour costs and stalled talks with the works council and IG Metall, the Stuttgart carmaker is taking action. The management board has decided to suspend all further investment at German sites for the time being. Possible plant closures are now also being considered in more concrete terms. Mercedes puts the brakes on spending As bild.de reported on Thursday, HR director Britta Seeger justified the move by pointing to the strained cost situation. The group now has to examine which locations in Germany can still be operated profitably in the long term. Mercedes wants to avoid plant closures as far as possible, she said, but this option now has to be pursued more seriously than before. The talks with employee representatives are considered deadlocked. A swift agreement is currently not in sight, Seeger explained in an internal interview that zeit.de reported on, citing the news agency Reuters. The aim remains a joint package that delivers noticeable savings while at the same time being socially acceptable. At the heart of the dispute are production costs. According to Mercedes, an hour of labour in German plants can cost up to five times as much as at sites in Eastern Europe. The management board is therefore demanding concessions on working conditions. One proposal under discussion is to extend working hours without increasing pay. Special payments such as profit sharing, holiday bonuses and Christmas bonuses could also be subject to cuts. The demands have already triggered protests among employees. Sindelfingen, Rastatt or Bremen? Head of production Michael Schiebe had already announced a few weeks ago that if cost reductions fail to materialise, two plants in Germany could be closed. Under current thinking, this would affect one vehicle assembly plant and one so called powertrain plant where vehicle components are manufactured. According to zeit.de, Mercedes operates assembly plants among other places in Sindelfingen, Rastatt and Bremen. Powertrain sites include Stuttgart-Untertürkheim, Affalterbach, Berlin, Hamburg and Kamenz as well as locations in Thuringia. It is not yet known which specific plants could be affected by possible closures. Volkswagen and subsidiary Audi are also cutting costs The cost cutting is seen as driven not only by high site costs but also by the group's economic difficulties. In recent years Mercedes-Benz has struggled with falling sales and slumping profits. The problems are not limited to the Stuttgart manufacturer. Volkswagen and Audi have also announced extensive savings programmes and job cuts. Automotive expert Ferdinand Dudenhöffer sees these developments, according to bild.de, as a consequence of the long known competitiveness problems of Germany as a car manufacturing location. Without a fundamental change in cost structures, he warns, Germany's car industry risks losing even more of its competitiveness. The dispute at Mercedes thus highlights the growing pressure on the German car industry. While the company is pushing for lower production costs, the works council and IG Metall are trying to safeguard jobs and collectively agreed benefits. An agreement is still not in sight.