Mercedes-Benz considers factory closures in Germany and suspends all new investments there
The German manufacturer suspends new investments and negotiates cost-saving measures in the face of Chinese competition
Quick Look
Mercedes-Benz plans to close factories in Germany and suspend any new investments in the country to reduce production costs in the face of Chinese competition, while negotiating with employee representatives and the IG Metall union.
AI-generated summary
Why It Matters
Mercedes-Benz, a manufacturer based in Stuttgart, is suffering a sharp decline in its sales in China, which is weighing on its profits. The group is negotiating with staff representatives new cost-saving measures to restore its competitiveness, in a context of salary discussions with the IG Metall union which is demanding a 5% increase in salaries.
The crisis-hit automobile giant Mercedes-Benz announced Thursday that it was considering closing factories in Germany and suspending any new investments in the country, believing it had to drastically reduce its production costs in the face of increasingly intense Chinese competition. In an interview broadcast internally to employees, which AFP was able to obtain, board member Britta Seeger deemed it necessary to “examine in a more concrete manner” the option of closing production sites.
Faced with a sharp decline in its sales in China which is weighing on its profits, the manufacturer from Stuttgart (southwest) is negotiating new cost-saving measures with staff representatives in order to restore its competitiveness. “We are now forced to carefully examine which German sites we should close if we fail to change our cost structure,” explained another board member, Michael Schiebe, quoted in the interview. “We will then manufacture the next models exclusively abroad,” he added.
Salary discussions in progress
The manager also announced the cessation of any new investment in the group's German sites until an agreement to reduce costs has been found. According to him, decisions regarding the next generation of vehicles must be made now, which increases pressure on the ongoing negotiations. These are taking place in particular against the backdrop of salary discussions with the IG Metall union, which is demanding a 5% increase in salaries, deemed “totally excessive” by Britta Seeger. “Such an increase would further increase labor costs, already high in Germany, while they are already far too high today in international comparison,” she said.
To relaunch itself, the group is also banking on a vast “productivity offensive”. But “despite intensive discussions, unfortunately no solution corridor is emerging for the moment,” according to Britta Seeger. Mercedes-Benz is considering an increase in working hours without salary compensation and is calling into question the 35-hour week, a historic achievement of the metallurgical industry which includes the automobile in Germany. “These are uncomfortable subjects,” admitted Britta Seeger, but according to her it is “the only way to preserve employment in Germany”.
What to Watch
AI outlook — possibilities, not facts
Negotiations between Mercedes-Benz and employee representatives, including IG Metall, will lead to an agreement on cost-saving measures in the coming weeks.
Likely · Within weeks
Mercedes-Benz will increase working hours without salary compensation and will call into question the 35-hour week if a cost reduction agreement is reached.
Possible · Within months
Open Questions
- Which German production sites could be closed?
- What timetable is planned for decisions on the next generation of vehicles?
- What will be the exact impact on employment in Germany?
