German luxury carmaker Mercedes-Benz is preparing a massive cost-cutting package aimed at cutting labor costs in Germany by around 800 million euros, management said on Monday, as the company faces mounting financial pressure on its domestic manufacturing operations.
To achieve this savings target, the company's management is considering implementing strict measures to optimize salary costs:
● Extending working hours without financial compensation: Revising the standard 35-hour workweek by requiring unpaid overtime.
● Adjusting or eliminating bonuses: Reducing or canceling annual vacation and Christmas bonuses.
● Cutting special payments: Cessation of other benefits and additional financial bonuses granted to employees in German plants.
Mercedes-Benz representatives avoided commenting on the specific details of the negotiations, describing the information as speculation in relation to ongoing internal discussions with social partners.
The message sent to employees by the group's management is a firm one: the current level of production costs in Germany has become unsustainable compared to other European industrial sites. The operational management has asked employee representatives to support efficiency measures to ensure the long-term viability of the plants in the country.
If the negotiations do not lead to reaching the savings threshold of 800 million euros, an extreme scenario is being considered that involves the closure of two production facilities in Germany — specifically, a vehicle assembly plant and a factory dedicated to propellant components.
The measure is supported by direct comparisons of production costs between German plants and units in other regions. For example, the group's production complex in Kecskemét (Hungary) has operating costs that are up to 70% lower than its German plants, offering expansion capacity that can take on substantial assembly volumes if the German plants do not adjust their cost structure.
The financial pressures on Mercedes-Benz are not an isolated case, but reflect a broader competitiveness crisis facing the entire German automotive industry. Traditional manufacturers are being hit by several disruptive factors at the same time:
1. The rise of Chinese manufacturers: The market entry of electric cars from China, manufactured at considerably lower costs, is putting huge pressure on the German brand's profit margins.
2. The costs of the transition to electric mobility: The billions of euros of investment required to develop new electric platforms and automotive software coincide with a temporary slowdown in the pace of adoption of battery vehicles on the European market.
3. The effects of trade tariffs and energy prices: Rising energy costs and inflation in the German industrial sector are making it difficult to maintain profitability on domestic assembly lines.
The measures envisaged by Mercedes-Benz are part of a general wave of structural adjustment in the German automotive sector:
● Volkswagen Group: It is carrying out the most extensive restructuring and cost-cutting program in its history, in turn analyzing the possibility of closing historical plants in Germany and revising collective labor agreements.
● BMW Group: It has initiated plans to streamline operating costs and optimize the personnel scheme, adapting its production capacities to fluctuating demand and new market realities.
Negotiations between Mercedes-Benz management, the employee board and unions will continue in the coming period, the outcome of which will determine the future of assembly plants and thousands of jobs in Germany.