Stuttgart. The dispute over labor costs at the car manufacturer Mercedes-Benz has reached a new peak. IG Metall and the general works council reacted snubbed to the renewed push by management around CEO Ola Källenius on the competitiveness of German locations.
Why is the mood so heated?
Collective bargaining negotiations are currently underway in Germany's key industry, the metal and electrical industry, with around 3.7 million employees nationwide. IG Metall is demanding 5 percent more money for employees.
Employers have offered a one-off payment over 26 months next year and a step increase of 1.3 percent in 2028. The employers' associations justified this offer below the general price increase with high costs and pointed out that hundreds of thousands of jobs would be cut, which would continue if conditions continued to be poor. The talks are deadlocked. Now there is a threat of all-day warning strikes.
How is the car manufacturer currently doing?
Mercedes-Benz received its forecast for the current year at the end of October. Källenius only expected earnings before interest and taxes to be at the previous year's level instead of significantly higher than previously expected. In the third quarter, profits increased by around 28 percent. From July to September, the consolidated result grew from 1.19 billion euros to around 1.52 billion euros compared to the same period last year. However, the brand with the star came from a low level. The bottom line profit had already collapsed in the past two years.
What are the reasons for this?
The difficult economic situation, the consequences of the Iran war and US tariffs are putting a strain on all car manufacturers. Mercedes-Benz is particularly suffering from weakness in China. In the highly competitive market, sales recently fell by almost a third (31 percent) in the third quarter. Overall, sales were 407,200 cars, which corresponded to a decline of eight percent compared to the same quarter of the previous year. Sales outside China increased by one percent compared to the same quarter last year.
How did the conflict over costs develop?
On the occasion of the presentation of the annual figures for 2024 in February last year, the car manufacturer announced a savings program. Mercedes spoke of a program to increase performance (“Next Level Performance”). This is intended to reduce production and fixed costs as well as material costs. Production capacities were also reduced.
The general works council and management quickly agreed on a package of measures. It contained a severance program for employees in indirect areas, i.e. not in production. At the same time, job security in Germany was extended until 2034. This excludes dismissals for operational reasons. Given the tense situation, the bonus for employees was also lower.
What role does the topic of working time play?
In the summer, supervisory board chairman Martin Brudermüller initiated a discussion about more competitive labor costs in Germany and longer working hours. “We should seriously approach the return to the 40-hour week,” Brudermüller told the “Handelsblatt” at the time.
In the German auto industry, the 35-hour week is standard for companies covered by collective agreements. A little later, the board postponed a special collective bargaining payment until the coming year. The entire issue drove thousands of workers onto the streets in July. At the same time, Mercedes celebrated the expansion of the factory in Kecskemet, Hungary. The factory costs there set standards in Europe, it was said. There were renewed protests in September.
What does the company continue to demand?
Management didn't give up and made new demands: Production director Michael Schiebe brought up the closure of two plants in Germany. The clear goal, however, is to maintain all locations in Germany. In addition, employees should come to the office four days a week again. At the same time, the company would like to further reduce its workforce. It is expected to relaunch its severance program at the beginning of December. This is again about the indirect areas.
Because there is no quick agreement in sight in the conflict, the management stepped up again on Thursday: Now it should be checked which locations in Germany can still be afforded. At the same time, the board of directors jointly decided to stop all further future investments in the German locations. The costs of an hour of work in production in Germany are sometimes up to five times higher than in locations in Eastern Europe. The discrepancy is similarly high in administration.
How do the general works council and the IG Metall union react?
The general works council is aware of the situation and the difficult situation that Mercedes-Benz finds itself in, said the chairman of the general works council, Ergun Lümali. "We need board members who believe in Germany as an industrial location and don't trash it every time there is a crisis. We firmly reject plant closures and know how to defend ourselves," said Lümali, according to the statement. IG Metall district manager Barbara Resch said that plant closures could not be done with the union. They are ready to find a solution and want to jointly make the locations future-proof and secure jobs.
