Mercedes-Benz halts new investments in Germany as factory closures come under consideration

German automotive giant Mercedes-Benz has decided to suspend all
new investments in its domestic production facilities, citing high
manufacturing costs and a failure to reach an agreement with
employee representatives on reducing labour expenses. The company
is also considering closing two factories in Germany as part of its
broader cost-cutting efforts.

According to Reuters, the decision was communicated to employees
in an internal management statement circulated on November 12.

Michael Schiebe, Mercedes-Benz’s head of production, said
negotiations with the works council and trade union representatives
had failed to produce an agreement on reducing operating costs. He
described Germany’s high production expenses as a growing challenge
for the company’s competitiveness.

The suspension of new investments follows several months of
discussions between management and employee representatives. The
automaker has been seeking ways to lower labour costs and improve
the efficiency of its German operations.

The possibility of shutting down two domestic factories had
already been raised in September. Schiebe warned at the time that
closures could become necessary if sufficient progress on cost
reductions was not achieved.

Britta Seeger, a member of the Mercedes-Benz management board,
reiterated that closing production facilities remained an
undesirable option. However, she acknowledged that the company now
had to examine the possibility more seriously.

“We all want to avoid factory closures at all costs.
Unfortunately, however, we now have to consider this option in
greater detail,” Seeger said in an internal communication to
employees.

The latest decision highlights the pressure facing Germany’s
automotive industry as manufacturers grapple with elevated
production costs and intensifying international competition.

Although Mercedes-Benz has suspended new investments in its
German facilities, the company has yet to announce a final decision
on closing any factories. The outcome will largely depend on
whether management and employee representatives can reach an
agreement on the proposed cost-saving measures.