Mercedes-Benz Threatens Closure of Two German Plants Amidst Labor Cost Disputes

Mercedes-Benz has warned it may close two of its German plants if labor costs are not significantly reduced, according to production chief Michael Schiebe. Speaking at a company meeting in Sindelfingen, Schiebe emphasized that while the company aims to preserve all its German locations, failure to reach cost-cutting agreements with employees could force the shutdown of one vehicle assembly plant and one powertrain facility.

This announcement comes ahead of negotiations slated for October 7 between companies in the metal and electrical industries and the IG Metall union, who represent many Mercedes employees. Around 20,000 workers protested in Sindelfingen against potential job cuts and austerity measures, signaling strong resistance from the workforce.

Though Mercedes-Benz reported a profit increase of over 13% in the second quarter—driven by its electric vehicle and financial services segments—the traditional automotive production side still faces pressure to reduce costs. In addition to threatening plant closures, management is proposing that employees work longer hours for the same pay, possibly moving toward a 38-hour work week.

Other cost-cutting measures include plans to reduce special employee benefits such as Christmas and vacation bonuses, along with annual profit sharing. These changes aim to lower labor costs per hour in Germany and enhance the company’s competitiveness internationally.

Union leaders and works councils have expressed concerns that ongoing reductions in production capacity at German sites could continue, following a history of shifting manufacturing to lower-wage countries. The public debate over labor costs intensifies as Mercedes-Benz pushes a so-called “production offensive for Germany” while simultaneously demanding concessions from its workforce.

This unfolding situation highlights the tension between maintaining Germany’s automotive industry jobs and the financial imperatives facing Mercedes-Benz amid global competition. With negotiations due in early October, the company and the IG Metall union stand at a critical juncture with significant implications for thousands of employees and the broader German automotive sector.