At carmaker Mercedes, negotiations over costs with the works council and the IG Metall union have reached an impasse. In light of these circumstances, the group's board of directors has now announced, as reported by German Television Channel 1 on its website, that it will study the option of closing factories in Germany. A decision was also made to “stop all further investments in Germany,” explained Michael Scheibeh, member of the Board of Management responsible for production, in an interview published on the group’s intranet. Scheibeh justified this decision by saying that despite numerous intense discussions it is not currently possible to identify a “path to a solution” to this problem and it is not possible to invest in Germany under the current cost structures.
The Board of Directors demands concessions from employees
The group increases pressure on the part of employees through these advertisements. Britta Seeger, personnel director, explained that the company now needs to decide what concessions employees will make in negotiations with the works council. “At the moment this cannot be expected. “We are therefore forced now to conduct a specific and detailed study of the locations where we can still afford them in Germany.” Although lockdowns should be avoided “at all costs,” unfortunately, this option must now be “pursued more specifically.” The cost per hour of labor in production in Germany is sometimes five times higher than in locations in Eastern Europe, he added. He added that if an agreement is not reached, the new models will be manufactured exclusively abroad.
Seager also pointed to ongoing wage negotiations in the metal and electrical industry. The EG Metal union is demanding a five percent wage increase. “Such an increase would raise labor costs in Germany, which are already high even though they are already very high compared to other countries.”
Demand a 40-hour work week instead of 35 hours
In total, Mercedes operates twelve production sites in Germany. Talks are currently taking place within the car manufacturer about what is known as the “productivity campaign” launched by the company with the aim of reducing costs. Due to the decline in profits in the private automobile sector, the Board of Directors demands that employees work longer hours without compensation in wages. The idea of working 40 hours instead of 35 hours was proposed. This is considered a red line for the works council and the EG Metal union, as the 35-hour work week is a key achievement for the union. Seager argued that the circumstances under which the reduction in working hours had been agreed upon at that time no longer existed. Increasing working hours can lead to a rapid rise in productivity without compromising employee wages. However, the management also wants to touch upon exceptional payments and voluntary benefits such as profit sharing as well as components stipulated in the collective labor agreement such as vacation pay and birthday allowance.
"In a very difficult environment"
Shaiba explained that he understands that “the measures under discussion demand a lot from our employees.” But he pointed out the need to take immediate action: “We live in an extremely difficult environment characterized by tariffs, price pressures, declining demand, and intense competition, especially from China.” Seger explained that the board of directors would also waive some financial benefits. Senior managers did not receive any pay increases during two rounds of pay negotiations. In recent years, Mercedes has faced a decline in sales and a sharp decline in profits. A few weeks ago, Shaibah proposed the idea of closing two factories in Germany if costs were not reduced. A German assembly plant and a German propulsion system manufacturing plant will be affected. Automotive components are manufactured in propulsion systems factories.
M.A.M
