Mercedes-Benz to halt ‘all future investments’ in Germany

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Carmaker has also warned that plant closures are an option in escalating stand-off with unions over bid to reduce labour costs ...

Mercedes-Benz has decided to halt “all further investments” in Germany and warned that plant closures were now an option, marking an escalation of its stand-off with unions in a bid to reduce labour costs.

The German premium car maker has called for longer working hours without extra pay to boost productivity but has failed to reach a deal with its works council despite four months of negotiations.

In an interview with board members published on the company’s intranet on Thursday, its production head Michael Schiebe said “the current cost structures do not allow us to invest in Germany”.

Britta Seeger, the group’s labour director, added: “We all want to avoid plant closures at all costs. Unfortunately, however, this is now an option we have to examine more concretely.”

The car maker issued a profit warning last month due to slumping sales in China and has accelerated its restructuring measures to compete against the rise of Chinese rivals in its home markets.

[ Mercedes bets on model blitz as China slump deepensOpens in new window ]

The company has called for employees to work 40 hours a week without extra pay, arguing that high labour costs are eroding the country’s competitiveness.

Today, a working week of 35 hours is the collectively agreed standard for about a fifth of German employees, concentrated in sectors including automotive, engineering, iron and steel.

“Despite numerous intensive discussions, we currently see no path towards an agreement,” Schiebe said. “But we need to act now. We are operating in an extremely challenging environment ... This has fundamentally changed our economic position.”

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