Due to high labour costs at its German plants, Mercedes is being forced to take drastic measures, including freezing investments in Germany. The company is also considering the possible closure of some plants.
Photo: Mercedes-Benz
Mercedes is facing the problem of high labour costs in Germany and has started putting pressure on the IG Metall trade union. As a first step, the Mercedes-Benz Board of Management has decided to halt future investments in its German plants. This was revealed in an interview with Production Director Michael Schiebe and Labour Director Britta Seeger, published on the company’s intranet on Thursday, November 12, and reported by German newspaper Handelsblatt.
More pessimistic scenarios are also being considered, including the closure of some plants in Germany or relocating production across the border. Britta Seeger told Handelsblatt that no agreement had been reached despite intensive discussions with the trade unions. The Mercedes executive also said that the German carmaker wants to avoid closing plants, but that “we are now forced to examine concretely and in detail which locations we can still afford to maintain in Germany.”
Mercedes has been in talks with the trade unions for several months over various cost-cutting measures. From Mercedes’ perspective, operating costs in Germany are significantly higher than at its plants outside the country, while the IG Metall union is unwilling to accept any cuts.
Mercedes wants to reduce costs in two main areas:
- Increase the working week from 35 to 38 hours, compared with the standard working week in the German automotive industry.
- Cut Christmas and holiday bonuses, as well as bonuses linked to the company’s financial performance.
Falling sales in China, US import tariffs and rising costs in Europe have all contributed to the current situation.
Mercedes has tried to counter these challenges with the biggest model offensive in the company’s history, involving 40 new models and facelifts over just two years, many of which have already been unveiled.
Mercedes is also hoping that its new electric models, based on modern platforms featuring 800V technology, will significantly increase the share of electric vehicles in total sales. These include the MMA platform used by the CLA, GLB and GLA, and the MB.EA platform underpinning the new electric C-Class and GLC.
