In the ongoing collective bargaining negotiations, the Mercedes board is putting increasing pressure on the employees. The company wants to reduce wages and increase working hours to make up for dwindling profits. To this end, production could also be relocated further and further abroad.

The car manufacturer Mercedes-Benz is temporarily stopping its investments in Germany. In addition, factory closures and further relocations abroad are becoming more likely. This emerges from an interview that was published on the company intranet on ThursdayHandelsblattis present. Production director Michael Schiebe explains that the board has jointly decided to stop all further investments in the German locations. Labor director Britta Seeger says: “If we don’t come to an agreement, we will take very tough steps.”

With the interview, the group is increasing the pressure in the ongoing negotiations about cost reductions in Germany. Since the end of June, CEO Ola Källenius, Seeger and Schiebe have been negotiating with works council heads Michael Peters (Bremen), Ergun Lümali (Sindelfingen) and Michael Häberle (Untertürkheim). Because working hours are a collective agreement issue, the IG Metall boss of Baden-Württemberg, Barbara Resch, has also been at the negotiating table for a few weeks. Even after months there has been no rapprochement; according to Handelsblatt, there is no compromise in sight from the negotiations.

Before the collective bargaining round: Mercedes wants to enforce three hours of unpaid overtime per week

More work for the same salary

The group wants employees in Germany to work longer for the same salary. “Working hours must become cheaper,” said a management circular at the end of June. According to Handelsblatt information, management is demanding at least 38 hours per week instead of the 35 that is usual in the German auto industry. In addition, Christmas and holiday bonuses as well as annual profit sharing should be reduced or eliminated entirely. With this so-called productivity offensive, the board wants to save 800 million euros annually, which could increase the profit margin by almost one percentage point.

Seeger said in the interview that without increasing productivity and reducing costs, one could hardly invest any more in Germany. She also announced that the board also wanted to waive part of the remuneration. The board has not yet been more specific about this.

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According to a presentation, at the company meetings in recent weeks at all Mercedes locations in Germany, management gave employees a choice. If labor costs could be reduced (“Option 1”), all locations would be retained and there would be a commitment for investments and products. Nevertheless, limited capacities should still be relocated abroad.

The group now wants to increasingly examine “Option 2”. According to the presentation, this envisages “comprehensive relocation of capacities abroad”, and an assembly plant and a components plant are also to be closed. It is unclear which locations would be affected. There is speculation internally that no work has been mentioned to the supervisory board. Rastatt and Bremen are considered candidates.

Mercedes has already relocated production to Hungary, and the largest Mercedes plant in Europe has been in Kecskemét since the summer. According to the presentation at the company meetings, labor costs in production there are 75 percent lower than the average at the German Mercedes plants, but employees there work 27.5 percent more on average annually. At the US plant in Tuscaloosa, labor costs are 17.9 percent lower and working hours are 33.1 percent higher. The management in this country is aiming for a cost level like in the USA, it is said internally. Schiebe said that the costs of an hour of work in production in Germany are sometimes up to five times higher than at locations in Eastern Europe.

The union and workforce are fighting back

TheIG Metalldefends itself against the cuts. "We are opposing this attack on Mercedes employees and the locations in Germany with all our might. Plant closures cannot be made with IG Metall," explains Jan Otto, IG Metall district manager for Berlin-Brandenburg-Saxony. Mercedes must now take responsibility for viable solutions. "We are ready to work on a sustainable future concept in order to secure jobs and plants in the long term. But it must be clear: the future will not be won by anyone who unilaterally places burdens on employees. Pressure and threats are not a basis for negotiations," emphasizes Otto.

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Other representatives of IG Metall and the works councils also reject the plans. Barbara Resch, district manager in Baden-Württemberg, also says: “Plant closures cannot be done with IG Metall.” She criticizes that it cannot be the case that the board wants to stop further investments and at the same time demand longer working hours and cuts in benefits from employees. The company must disclose its plans and create binding prospects for products and investments. Fevzi Sikar, chairman of the works council at the Marienfelde plant in Berlin, explains: “Stopping investments is not a future concept.”

Car manufacturer in crisis

The German economy has been in crisis for several years, and car production in particular is coming under increasing pressure. The sales market is highly competitive, China is increasingly emerging as a producer and imports on the Chinese market are increasingly drying up. In addition, some potential customers lack the money for expensive cars due to the weak economy and rising costs of living. Mercedes-Benz's unadjusted earnings before interest and taxes were over 20 billion euros in 2022, compared to 5.8 billion euros last year. The group had recently warned of lower profits and canceled its sales and sales forecast in the summer.

Salary freeze until 2030: VW is putting employees under pressure before collective bargaining

Other car manufacturers are also making cuts. Volkswagen recently announced that it would cut up to 100,000 jobs. In addition, in the future only 30 instead of 36 days of vacation will apply. At the VW subsidiary Porsche, around 5,000 jobs are to be eliminated in the Stuttgart region alone over the next few years; together with the cuts decided last year, the number will be around 8,900. The main plant in Stuttgart-Zuffenhausen and the development center in Weissach are affected. Porsche promises to secure the location until 2035; according to the company and the works council, there should be no redundancies for operational reasons. However, Christmas bonuses and employee bonuses will be reduced, and home office should only be possible eight days a month instead of twelve.

BMW plans to cut around 8,000 jobs worldwide from October, primarily in planning and administration. In addition, from April 2027, new employment contracts will only be concluded for 35 hours per week, instead of the current 38 to 40 hours.

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