Mercedes-Benz halts all further investment at German facilities

In brief

• Mercedes-Benz has halted all further investment in its German plants.
• The company is now examining possible plant closures in Germany.
• Management says labour costs in Germany can be up to five times higher than in Eastern Europe.
• Cost-cutting talks with the works council and IG Metall have stalled.

Investment freeze

The board of Mercedes-Benz has decided to stop all further investment in the company's German sites, production board member Michael Schiebe said in an interview published on the internal intranet on Thursday (Mercedes stoppt Investitionen in Deutschland - und prüft Schließungen – tagesschau.de) (Automobilindustrie - Mercedes stoppt alle neuen Investitionen in Deutschland – Deutschlandfunk) (Mercedes-Benz: Konzern stoppt Investitionen in deutsche Werke und prüft Schließungen – DER SPIEGEL) (Mercedes-Benz: Mercedes stoppt alle neuen Investitionen in deutsche Standorte – ZEIT ONLINE). Schiebe said that despite many intensive discussions, the company cannot yet see a workable range of solutions and cannot invest in Germany under the current cost structure.

Plant closures on the table

The management has also said it will examine the option of closing German plants. Schiebe said the company wants to avoid closures at any cost, but must now pursue the option more concretely. Human resources board member Britta Seeger described closures as a last resort, while saying the company now has to consider that option more specifically (Mercedes-Benz pozastavil investície do nemeckých závodov. V hre je aj ich zatvorenie, firma znižuje náklady – HNonline.sk). The aim, she said, is to work with partners on measures that have a noticeable effect but remain socially manageable.

Cost gap

Schiebe pointed to labour costs that in some cases are five times higher in Germany than at plants in Eastern Europe, with similar gaps in administrative costs. He had warned weeks earlier that if costs could not be reduced, the carmaker would close two German plants.

Negotiations

Talks on cost reductions between management and employee representatives have been under way since the summer. One of the group's demands is that staff work more hours per week at the same pay. A quick agreement with unions and employee representatives does not appear likely at this stage.

Wider industry context

The announcement came a day after Volkswagen said it was reviewing its investments in Wolfsburg and halting its 'Gamechanger' production modernisation project.