Mercedes-Benz halts all German investment and weighs closing plants

Investment freeze

Mercedes-Benz has stopped all further investment in its German sites for the time being. Production board member Michael Schiebe announced the decision in an internal interview with labour director Britta Seeger, published on the company intranet on Thursday, 12 November, and seen by Handelsblatt. Schiebe said the board decided jointly because talks with employee representatives have produced no solution corridor, and investing under today's cost structures in Germany no longer pays. He added that decisions on the next vehicle generations have to be taken now, because industrialisation requires long lead times. A company spokesperson confirmed that the board statements were published as quoted.

“We are now forced to carefully examine which German sites we would have to close should we fail to change the cost structure.”

The labour cost dispute

Management and works councils have been negotiating cost cuts for months without a breakthrough. Seeger said a quick agreement is not foreseeable, and the company wants a package that works noticeably while staying socially sustainable. Schiebe put the gap bluntly: one production labour hour in Germany can cost up to five times as much as at sites in Eastern Europe, with administration showing a similar gap. A management circular in late June had already said the labour hour must become cheaper. Citing people familiar with the talks, FAZ and Wirtschaftswoche report that weekly working time would rise from 35 to 40 hours without wage compensation. Wirtschaftswoche also reported that the package could add up to 800 million euros, and that special payments and voluntary benefits such as profit sharing, holiday pay and Christmas bonuses are on the table.

Plants under review

In October, Schiebe had warned at works meetings that two German plants could close if employee representatives did not go along. Mercedes has not said which plants would be affected, but the two would be one assembly plant and one powertrain plant. Assembly sites are in Sindelfingen, Rastatt and Bremen, while powertrain plants are in Stuttgart-Untertürkheim, Affalterbach, Berlin, Hamburg, Kamenz, Kölleda and Arnstadt. Seeger said the company wants to avoid closures at any cost, but that the option must now be pursued more concretely.

“We all want to avoid plant closures at any price.”

Reactions and next steps

IG Metall opposes the cuts, according to Handelsblatt. The company-wide works council could not be reached for comment at short notice. Seeger said the board will also make financial sacrifices itself. No settlement has been announced so far.