Mercedes-Benz is halting all investments in Germany and considering plant closures to tackle the high cost of car manufacturing in the country, according to a memo to workers seen by Reuters on Thursday.
Management took the decision because it cannot agree with works council and union representatives on labour cost reductions, according to an interview with executive board members shared on the company's intranet.
Production chief Michael Schiebe said management had "jointly decided to halt all further investments in our German locations." Board member Britta Seeger added: "We all want to avoid plant closures at all costs. Unfortunately, however, we must now explore this option in more detail."
Mercedes has for months been pushing workers to find cost savings. In September, Schiebe warned staff that two plants could close in Germany if there was no progress on the issue — a prospect that now appears more likely, according to the executives' message on Thursday.
The halt marks an escalation in the months-long standoff over costs at Germany's most prominent premium carmaker, and raises the stakes for union talks that have so far failed to produce the savings management says it needs.
