Mercedes says German production not competitive, two plants under threat

Mercedes Says German Production Faces Threat as High Costs Loom Over Two Plants

Challenges Facing Mercedes-Benz Production in Germany

BERLIN, Sept 22 (Reuters) - Mercedes-Benz production in Germany is not competitive by international standards, in particular due to high labour costs, the premium automaker said on Tuesday, after a top executive warned workers that two plants could close.

The company wants to maintain plants and employment in Germany, it said in an emailed statement to Reuters. "But to do that, we need framework conditions that boost productivity in Germany," it added.

Executive Warnings and Potential Plant Closures

On Monday, Mercedes production chief Michael Schiebe told workers gathered at the automaker's 111-year-old plant in Sindelfingen that closures loomed if costs were not reduced.

Commitment to German Locations

"Our clear goal is to maintain all of our German locations," Schiebe said, adding that this required a joint commitment to cost measures.

Consequences of Failing to Cut Costs

"If we are unable to do this, we will have to close one German assembly plant and one German powertrain plant," he said, according to excerpts of his speech shared by the company.

Mercedes did not specify which plants were under threat.

Response from Employee Representatives

Works Council Opposition

"Threatening plant closures is no way to shape the future. Anyone who resorts to such threats must expect our determined resistance," a spokesperson for Mercedes' general works council, the company's central employee representation body, said.

Employee Stance on Management's Ultimatum

"If the management board believes it can pressure employees with the ultimatum of 'concessions or plant closures,' our answer is a clear 'not on our watch'", she added.

Broader Industry Context

The workers' assembly took place against the backdrop of nationwide protests organised by the IG Metall union, in which tens of thousands of auto workers demonstrated against mass layoffs in their sector, which is battling to compete with low-cost Chinese rivals while absorbing steep US tariffs.

(Reporting by Ilona Wissenbach and Rachel More, writing by Emanuele Berro; Editing by Emelia Sithole-Matarise and Louise Heavens)