Mercedes-Benz Threatens Two German Plant Closures as Labor Standoff Escalates
Published on 09/22/2026 at 13:51 | Editorial boerse-global.de
Mercedes-Benz has drawn a hard line in the sand over its domestic manufacturing footprint, with production chief Michael Schiebe telling workers that two German factories will have to close unless the workforce agrees to cost-cutting measures. The ultimatum, delivered at a Sindelfingen works meeting, marks a sharp escalation in the Stuttgart automaker's campaign to rein in expenses it says have made its home operations uncompetitive on the world stage.
Schiebe framed the preservation of all German sites as the board's stated priority, but attached a condition: without a savings agreement, one assembly plant and one powertrain components facility would be shuttered. Management has not identified which locations would be on the chopping block. On the vehicle side, only three German plants are in play — Sindelfingen, Rastatt and Bremen — while the components and drivetrain network spans seven sites, including Stuttgart-Untertürkheim, Berlin, Hamburg, Kamenz, Affalterbach, Kölleda and Arnstadt.
A Cost Gap That Keeps Widening
The backdrop to the confrontation is a combination of weakening demand in China and US trade tariffs, even as Mercedes-Benz expands capacity abroad. Its Hungarian plant in Kecskemét, now the group's largest European production site, operates at labor costs roughly 70% to 75% below German levels, according to company sources.
To keep the remaining German factories viable, management is pressing for longer hours without extra pay — a move from a 35-hour to a 38-hour week — alongside adjustments to annual profit-sharing and cuts to Christmas and holiday bonuses, as reported by Handelsblatt.
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Labor representatives have rejected the package outright. Deputy works council chief Michael Häberle called the proposals a "horror catalog" and said the two sides remain miles apart, insisting that employees want credible future plans for the plants rather than being pushed around by international competition. General works council chief Ergun Lümali also took aim at the board, accusing leadership of having lost its feel for the workforce.
Protests and a Looming Bargaining Round
The dispute is unfolding against a wave of industrial unrest. Around 175,000 workers across the German auto and supplier sector joined IG Metall demonstrations against job cuts on Monday, with roughly 20,000 of them at Sindelfingen alone.
Timing adds further tension. Collective bargaining for the metal and electrical industry begins on October 7, and the peace obligation expires at the end of the month. By brandishing the closure option now, management is clearly looking to build leverage ahead of those talks.
Margins Under Pressure, Investors on Edge
The hardline stance reflects mounting strain on profitability. An EY industry study found that operating profit at German automakers fell noticeably in the first half of the year, driven largely by declining sales in China. UBS analyst Patrick Hummel keeps a "Neutral" rating on the stock, noting that hitting full-year targets will hinge heavily on how the fourth quarter plays out.
Equity investors have already voted with their feet. Mercedes-Benz shares closed Tuesday at EUR 43.38, down 1.7% on the day from the prior session's EUR 43.58 close, and have shed 28% of their value since the start of the year.
A workable compromise with employees is seen as a key precondition for aligning the German plants' cost base with a changed market reality. On September 28, CEO Ola Källenius and Schiebe are scheduled to take questions from staff in Stuttgart.
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