Mercedes-Benz has halted all new investments at its German manufacturing sites after labor cost negotiations reached an impasse, according to an internal company document reviewed by Reuters and reported by Bloomberght on Thursday.
The Stuttgart-based automaker took the step following months of unsuccessful talks with worker councils and the IG Metall union over reducing high domestic manufacturing expenses. Management and employee representatives failed to agree on structural labor modifications, leading to the joint decision to suspend capital allocation for German facilities, as detailed by Diken.
- Capital Halt: Mercedes-Benz Group (Xetra: MBG) suspended all new investments across its German factory network following failed cost-reduction talks.
- Labor Disconnect: Management sought to extend weekly working hours from 35 to 40 without base pay increases and trim bonuses, which unions rejected.
- Facility Risks: Executives warn that an assembly plant and a powertrain component factory face potential closure if an agreement is not reached.
According to euronews, hourly labor expenses at Mercedes-Benz facilities in Germany run up to five times higher than at comparable sites in Eastern Europe. To counter these overhead pressures, corporate leadership proposed lengthening weekly shifts from 35 to 40 hours without raising base compensation, alongside trimming profit-sharing, holiday bonuses, and Christmas allowances. Employee representatives have opposed these adjustments.
“Hepimiz her ne pahasına olursa olsun tesis kapanmalarından kaçınmak istiyoruz ancak ne yazık ki, artık bu seçeneği daha somut bir şekilde ele almalıyız.”
said Britta Seeger, Member of the Board of Management for Human Resources at Mercedes-Benz, as reported by Evrensel.net.
Production chief Michael Schiebe warned in September that failure to curb expenses would force the closure of two domestic facilities: one vehicle assembly plant and one powertrain component factory. Potential assembly locations under review include Sindelfingen, Rastatt, and Bremen.
| Metric / Focus Area | Reported Detail | Operational Impact |
|---|---|---|
| Labor Cost Differential | Up to 5x higher in Germany vs. Eastern Europe | Drives domestic margin compression |
| Proposed Hours Adjustment | 35 to 40 hours weekly without base wage increases | Rejected by employee councils and IG Metall |
| At-Risk Facilities | One assembly plant, one powertrain plant | Closures under serious consideration |
The investment halt coincides with broader headwinds across the automotive sector, including softening demand for luxury vehicles in China and increased competition from Chinese electric vehicle manufacturers. European and North American adoption rates for battery-electric models have also fallen short of initial projections, compounding margin pressures across legacy producers.
Automotive analyst Ferdinand Dudenhöffer said that these developments reflect long-standing structural competitiveness challenges facing Germany as an industrial manufacturing hub. Concurrently, other major German automakers, including Volkswagen AG and its luxury subsidiary Audi, have announced extensive cost-cutting programs and job reductions.
Mercedes-Benz reported that its car division’s sales return on sales dropped to 3.3% during the first nine months of the year, as highlighted by Evrensel.net.
