The tone in the negotiations has now sharpened dramatically. This is evident in an interview published on Thursday on the Mercedes intranet, first quoted by Germany’s business and economics newspaper, Handelsblatt. In response to the current state of wage negotiations with unions, Production Board Member Michael Schiebe announced that the company will not make any further investments in Germany for the time being and that factory closures in Germany and additional relocations abroad are becoming increasingly likely.
The background is a bitter dispute between the executive board and the trade union side: “At the heart of the matter are the 35-hour workweek, which Mercedes CEO Ola Källenius wants to abolish, as well as a reduction in labour costs. The conflict has been simmering since the end of June,” the Handelsblatt explains. The open threat comes at a stage in the negotiations “where neither side is willing to make any further concessions”.
Schiebe stated in the interview published internally, “We have jointly decided in the board to halt all further investments in the German sites.” He added: “The cost of one hour of labour in production in Germany is in some cases up to five times higher than at locations in Eastern Europe.” Pointing to the USA, he said even costs in this high-wage location are significantly lower than in Germany.
Schiebe also emphasised the urgency of the situation. Due to the necessary lead times, Mercedes must now decide where the next generations of vehicles will be built. “We are now forced to carefully examine which German sites we would have to close if we do not achieve a change in the cost structure,” says Schiebe. “Successor products will then be manufactured exclusively abroad.”
This extreme positioning is intended to move the negotiations forward. According to Handelsblatt, citing insiders, employees would only make concessions in exchange for reliable commitments on future employment and plant utilisation in Germany. In turn, management is tying its commitments for Germany to reduced labour costs.
Mercedes wants to get employees in Germany, for example, to work longer hours for the same pay. The automaker wants to eliminate or reduce special payments, such as Christmas and holiday bonuses, as well as annual profit-sharing bonuses. According to Handelsblatt, management aims to save €800 million annually in this way. The board itself also intends to waive parts of its remuneration.
The cost-saving measures are becoming urgent as Mercedes struggles with declining sales figures—primarily “due to the collapsing Chinese business, burdens from US tariffs, or the consequences of the Iran war,” the report states. Management errors are also a factor. The DAX-listed company warned of lower profits a few weeks ago. In the summer, the German automaker had already withdrawn its sales and production forecast.
Currently, Mercedes operates vehicle plants in Germany in Sindelfingen near Stuttgart, Bremen, and Rastatt. Component plants are located in Stuttgart-Untertürkheim, Affalterbach near Stuttgart, Berlin, Hamburg, Kamenz, Kölleda, and Arnstadt.
