Mercedes-Benz has put a brake on new spending at its German production sites, suspending all further investment while it reassesses which factories can remain profitable. The Stuttgart-based carmaker is now treating plant closures as a realistic option, not just a distant threat, as negotiations with employee representatives and the IG Metall union remain stuck.
Britta Seeger, the board member responsible for human resources, told an internal interview reported by Reuters and carried by Zeit Online that the company's cost position is under severe strain. She said the group must examine which locations in Germany can still be operated economically in the long term. While Mercedes would prefer to avoid shutting plants, she acknowledged that the option now has to be pursued more seriously than before.
Cost gap drives the conflict
At the heart of the dispute is the gap in production costs. According to Mercedes, an hour of labour at its German plants can cost up to five times as much as at sites in Eastern Europe. The management board is demanding concessions on working conditions, including extending working hours without additional pay. It is also proposing cuts to special payments such as profit-sharing, holiday bonuses and Christmas bonuses.
Those demands have already triggered protests among employees. The works council and IG Metall are pushing back, seeking to protect jobs and collectively agreed benefits. Seeger said a swift agreement is not in sight, and the aim remains a joint package that delivers noticeable savings while being socially acceptable.
The company's production chief, Michael Schiebe, had already warned a few weeks ago that if cost reductions fail to materialise, two plants could close: one vehicle assembly plant and one powertrain plant, where components such as engines and transmissions are made. Mercedes operates assembly sites in Sindelfingen, Rastatt and Bremen, and powertrain facilities in Stuttgart-Untertürkheim, Affalterbach, Berlin, Hamburg, Kamenz and Thuringia. Which specific sites might be affected has not been disclosed.
The pressure on Mercedes is not unique. Volkswagen and its subsidiary Audi have also announced extensive savings programmes and job cuts. The broader German car industry is grappling with high energy costs, a slow transition to electric vehicles and intensifying competition from China. A recent rebound in industrial output, partly driven by carmakers, has done little to ease the structural concerns.
Automotive expert Ferdinand Dudenhöffer told Bild that the developments are a consequence of long-known competitiveness problems in Germany as a car manufacturing location. Without a fundamental change in cost structures, he warned, Germany's car industry risks losing even more ground internationally.
The standoff at Mercedes highlights the growing tension between cost-cutting and job security in one of Europe's most important industrial sectors. As the company pushes for lower production costs, the unions are fighting to preserve jobs and benefits. An agreement is still not in sight, and the future of several German plants hangs in the balance.
For the wider European economy, the outcome matters beyond Stuttgart. Germany remains the continent's manufacturing powerhouse, and its car industry supports hundreds of thousands of jobs across the EU. The decisions made in the coming months could shape the region's industrial landscape for years. As EU enlargement opens new investment opportunities, the contrast between high-cost Western sites and lower-cost Eastern locations becomes ever more pronounced.
