Mercedes-Benz halts all investments in its German facilities – automaker now weighing plant closures

The woes continue to pile up for Germany’s auto sector, which, as Volkswagen CEO Oliver Blume put it last month, is under “enormous pressure” from Chinese competition and a rapidly changing market. Having already triggered the largest ever restructuring at Volkswagen, ​threatening tens of thousands of jobs in the country’s most important industry, the crisis continues to escalate, now impacting Mercedes-Benz.

As Reuters reports, Mercedes-Benz is halting all investments in its German plants and is exploring site ‌closures to tackle the high cost of car manufacturing in the country. This was indicated in an intranet memo sent to workers, with the document having being sighted by the news agency.

In the memo, Mercedes board member Michael Schiebe said management had “jointly decided to halt all further investments in our German locations.” The company is also weighing plant closures, the memo added.

In an interview with executive board members, the automaker said it has ​decided to suspend investments because it cannot agree with its works council and union representatives on labour cost reductions. This is sometimes five times higher than at plants in Eastern Europe, where administrative costs are also much cheaper.

Back in September, Schiebe warned staff ​that two plants could close in Germany if there was no progress on the issue. The latest message suggests that management is now preparing for potential closures.

As indicated in the memo by management board member ​Britta Seeger, the automaker was “forced to examine, in concrete and detailed terms, which sites in Germany we can still afford to maintain. We all want to avoid plant closures at all costs. Unfortunately, however, we must now explore this option in more detail.”

The threats come as ⁠negotiations continue with the country’s largest trade union, IG Metall. Separately, Volkswagen is set to begin its own negotiations with the union on November 24, with strikes looming at the turn of the ​year amid tensions over plans that could lead to 100,000 job losses and the ​closure of up ⁠to four German plants.

In a sign of how quickly ​the crisis is spreading, moving into the supply chain, global supplier Schaeffler said last week it would slash 3,460 ⁠jobs and close five sites in Europe, four of them in Germany, citing a softening market.

Add paultan.org as a preferred source on Google SearchAdd Follow paultan.org on Google NewsFollow