The key facts

  • Mercedes-Benz is considering closing plants in Germany due to a conflict with the works council over cost cuts
  • The company is discussing extending the working week from 35 to 40 hours without a pay raise; IG Metall is opposed
  • Investments in German plants are frozen; in October a warning was issued about the possible closure of two plants

The company is examining which plants can be kept

The German automotive group Mercedes-Benz is considering the possibility of closing its plants in Germany amid a conflict with the works council over cost cuts. The company's HR director Britta Seeger said that so far no possibility of a compromise with employees is in sight, so the group is forced to examine in detail which plants in Germany it can keep financially viable. 'None of us wants plant closures. But, unfortunately, we have to seriously consider this option as well,' she noted. At the same time, the group's management board has halted all new investments in German plants.

Dispute over working hours and payments

Mercedes-Benz operates 12 production plants in Germany. Against the backdrop of declining profits from passenger car sales, management is demanding that employees work more without a pay raise: an extension of the working week from 35 to 40 hours is under discussion. The works council and the union IG Metall are sharply opposed, since the 35-hour week is considered one of the union's main achievements. According to Seeger, the conditions that once made it possible to introduce the reduced working week no longer exist, and extending working hours would quickly raise productivity without cutting wages. In addition, management plans to cut supplements, bonuses, employees' share in profit distribution, as well as vacation and Christmas payments stipulated by the collective agreement.

Context: warning about two plants and cost pressure

Risks to German sites had been warned about before: in October, production director Michael Schiebe stated that without concessions from employees, two plants in Germany could close. Group head Ola Källenius set the task of cutting labor costs by up to 80%. Due to the lack of progress in negotiations and high costs, investments in German plants are frozen; if no agreement can be reached, new models will be produced exclusively abroad. According to the company, the cost of one working hour in Germany is up to five times higher than in Eastern Europe; Mercedes-Benz is currently expanding a plant in Hungary. Schiebe explained the situation by 'extremely difficult conditions': tariffs, price pressure, falling demand and, in particular, fierce competition from China.