Mercedes-Benz suspends investment in Germany and considers closing factories

The difficulties facing Germany’s automotive industry are mounting. Following Volkswagen’s troubles, Mercedes-Benz has also decided to suspend all investment in its German factories and is considering closing some of them.

According to Reuters, the decision is mainly linked to high production costs in Germany. Company executives, the works council and union representatives have failed to reach an agreement on reducing labor costs.

Michael Schiebe, head of production at Mercedes-Benz, confirmed that there would be no further investment in the company’s German facilities. Executives have also acknowledged that the possibility of closing factories must be seriously considered.

Britta Seeger, a member of the Mercedes-Benz management board, said everyone wanted to avoid factory closures at all costs, but that, unfortunately, the possibility now had to be examined in greater detail.

For several months, the company has been asking employees to suggest ways to reduce costs. In September, Schiebe warned that two factories in Germany could close if cost-cutting talks failed to make progress.

Negotiations with IG Metall, one of Germany’s largest trade unions, are continuing. Volkswagen is also expected to face difficult talks with unions, which are scheduled to begin on November 24.

Volkswagen’s planned restructuring could result in the loss of up to 100,000 jobs and the closure of up to four German factories. Tensions between the company and its employees remain high.

Schaeffler has also announced cuts: 3,460 jobs and five facilities in Europe, four of them in Germany. The company attributes the decision to weak demand for vehicles with internal combustion engines. Consultancy Roland Berger warns that the German automotive industry could lose at least 200,000 jobs by 2030.

One significant factor is that China is no longer the same source of profit for German manufacturers. Chinese companies are competing fiercely with them and expanding their presence in the European market as well.