At Mercedes-Benz, the search for a compromise in reducing labor costs in Germany is becoming increasingly difficult. Time is of the essence. The group wants to make important investment decisions by the end of the year. This is about how the factories will be equipped and modernized for the next model generation, which will come onto the market in the early 2030s.
The conflict between management and workers has escalated. On Thursday evening, Mercedes management wrote that it wanted to stop all further investments in German locations. The group also wants to “concretely and in detail examine” which locations it can still afford in Germany. The Handelsblatt first reported on it.
The IG Metall union and the general works council criticized the approach on Friday morning. “We need board members who believe in Germany as an industrial location and don’t talk it down with every crisis,” said Mercedes works council boss Ergun Lümali.
The head of IG Metall in Baden-Württemberg, Barbara Resch, said: "Pressure and threats will not get us anywhere. We expect the company to take responsibility and work seriously with us on viable solutions for the future of the German locations."
There have been discussions at Mercedes for months about lower labor costs at its most important location in Germany. Employees and employers accuse each other of blocking the negotiations.
On Friday, employee representatives privately criticized the board's communication style. It was already known that Mercedes wanted to close plants in Germany and stop investments in Germany. With the new email, management only wants to increase public pressure. According to those close to the company, the escalation could permanently disrupt the basis for discussions.
Mercedes is in a crisis. The declining car business in China, increasing competition in Europe and rising costs as a result of the Iran conflict are putting pressure on profits, sales and sales. In addition, there are home-made problems as a result of management errors.
In June, management announced a stricter austerity program in Germany. “The working hours must be cheaper,” the board wrote in a circular email. The group requires its employees in Germany to do unpaid overtime in order to reduce the average cost per car produced. Mercedes' collective bargaining employees currently work 35 hours per week.
Special benefits such as Christmas bonuses or annual profit sharing are also available. The group had already withheld a special payment for a short time in July. According to Handelsblatt information, Mercedes wants to save around 800 million euros annually with the measures, which would increase the profit margin by around one percentage point. Two thirds of the 164,000 employees worldwide work in their home country, 90,000 are paid according to the IG Metall tariff.
There has so far been no decisive rapprochement in the negotiations, which have been ongoing since the end of June. “Despite intensive discussions, unfortunately there are currently no signs of a solution corridor,” said Human Resources Manager Britta Seeger on the intranet on Thursday.
According to people familiar with the negotiations, the conflict is as follows: Management is linking commitments to investments in Germany to a reduction in labor costs. The employees, on the other hand, are only willing to make concessions when there are binding statements about future factory occupancy and investments in Germany.
The employees are bothered by the fact that Mercedes wants to relocate further capacity abroad even in the event of a compromise. The largest Mercedes plant in Europe has been in Kecskemét, Hungary, since the summer. According to the company, labor costs there are 75 percent lower.
Apparently management also refuses to offer employment guarantees. So far, Mercedes' jobs in Germany are secure until the end of 2034.
“It cannot be the case that the board wants to stop further investments in German locations and at the same time demands longer working hours and cuts in benefits from employees,” says IG Metall district manager Resch.
The management, in turn, is bothered by the fact that IG Metall does not want to move away from the dogma of the 35-hour week. According to reports, the Mercedes works councils are more willing to accept unpaid overtime in order to secure locations and jobs. The 35-hour week is one of IG Metall's greatest achievements.
Management is aware of this, said Labor Director Seeger. "We don't question it lightly either. But the conditions under which it was agreed no longer exist today."
According to Handelsblatt information, the negotiators include CEO Ola Källenius, labor director Seeger and production director Schiebe. Some plant managers are also there. The employee side is represented by the works council heads Michael Peters (Bremen), Ergun Lümali (Sindelfingen) and Michael Häberle (Untertürkheim). Because working hours are a collective agreement issue, union representative Resch is also at the negotiating table, but only for a few weeks.
Despite the escalation, further negotiation dates are scheduled for the coming weeks. But even insiders find it difficult to say when an agreement will be reached and what a possible compromise might look like. “This will be a painful process,” said works council leader Lümali on November 6th during a warning strike in Sindelfingen.
According to Handelsblatt information, management has moved away from its original demand for a 40-hour week and is now pushing for 38 hours. The other side should be prepared to do unpaid extra work, but only for a limited period of time. That in turn should not be enough for management.
Lümali said on Friday: “We are aware of the situation.” They are solution-oriented and will get involved in the difficult situation Mercedes finds itself in. During the warning strike in Sindelfingen, he had already prepared the workforce for concessions. He dampened expectations that a profit share would be paid out next year.
Mercedes production director Michael Schiebe announced weeks ago that two plants in Germany would be closed if costs in Germany were not reduced. The clear goal, however, is to maintain all locations in Germany. At that time, Schiebe had talked about wanting to close a vehicle and components factory in Germany. There is no further information about locations in Thursday's letter.
Mercedes builds vehicles in Sindelfingen near Stuttgart, Bremen and Rastatt in Baden. Mercedes produces components in Stuttgart-Untertürkheim, Affalterbach near Stuttgart, Berlin, Hamburg, Kamenz (Saxony) and Kölleda and Arnstadt (Thuringia).
“Plant closures cannot be done with IG Metall,” said trade unionist Resch. Works councilor Lümali added that German engineering is still highly recognized.
In parallel to the discussions about labor costs at Mercedes, the collective bargaining round in the metal and electrical industries is also underway in the group. Here too it amounts to an escalation.
IG Metall is demanding five percent more wages retroactively to November. Employers are currently offering a wage increase of 1.3 percent from summer 2028 and a one-off payment in summer 2027. Mercedes labor director Britta Seeger considers the demands to be “completely excessive”. That would further increase the already high labor costs in Germany.
Because the first talks between IG Metall and the employers' association were unsuccessful, there is now a risk of longer warning strikes for the first time since 2018. There are likely to be 24-hour warning strikes in just over a week. This is the final escalation stage before the indefinite industrial action.
