Mercedes board threatens employees: plant closures and no money for German plants

The car manufacturer Mercedes-Benz is threatening to close plants and stop all investments in Germany for the time being. “Despite intensive discussions” with the works council about cost reductions at the German locations, “unfortunately there is currently no sign of a solution corridor,” wrote labor director Britta Seeger in an internal interview. “We are therefore now forced to examine specifically and in detail which locations we can still afford in Germany.”

The works council and IG Metall criticized the threats on Friday and announced resistance: “We firmly reject factory closures and know how to defend ourselves,” it said in a joint statement. The company must disclose its plans for discussions and thereby “create binding prospects for products and investments”.

The background is the crisis in the automotive industry in Germany. Volkswagen had also repeatedly threatened employee representatives with plant closures against the backdrop of falling sales figures and margins if labor costs did not fall. Up to 100,000 jobs are to be lost at Europe's largest car manufacturer. The supplier Schaeffler also recently announced that it would cut 3,500 jobs.

At company meetings in October, Mercedes production director Michael Schiebe had already warned that if employee representatives did not go along, two German plants could be closed. It remained unclear which locations could be affected. According to the company, around 164,000 people worked at Mercedes-Benz at the end of 2025, around 108,000 in ten plants in Germany.

CEO Ola Källenius recently set a target of reducing labor costs in Germany by 20 percent - to the level in the USA. Schiebe now added that, despite many discussions with the works council, no solution could be found and the cost structures were currently too high, the board had decided to stop all further investments in German locations. New models would only be manufactured abroad if no agreement was reached. The working hour in Germany is up to five times more expensive than in Eastern Europe. Mercedes-Benz is expanding its plant in Hungary there.

Specifically, it's obviously about more work and fewer allowances. According to Handelsblatt, instead of 35 working hours per week, Mercedes management is demanding at least 38, and Christmas and holiday bonuses and the annual bonus should be reduced. At the same time, collective bargaining is underway in the metal and electrical industries. Here, IG Metall is demanding five percent more wages, HR director Seeger considers this to be “completely excessive” given the current situation.

“The employer side seems to be copying some of VW’s brutal industrial action methods,” said left-wing member of the Bundestag Cem Ince. Both companies are “taking parts of German industry hostage in order to enforce their capital interests”. Just like the VW employees, the workforce at Mercedes is “well organized and ready to strike.”

Mercedes has similar problems to Volkswagen and to some extent BMW: a switch to electric drives that is too slow, too few digital features, and cars that are sometimes too big. The German models often flop in important markets such as the USA and China, plus there is overall weaker demand in the core markets and high US tariffs. The return on investment at the Mercedes-Benz Cars passenger car division fell over the course of the year. From January to September, the premium brand achieved an increase of 3.3 percent. The target for the entire group for the entire year was 3 to 5 percent. Because of the lousy core business, the board has already canceled all growth targets for 2026. (with agencies)