Mercedes Compares German Plants With Overseas Sites
A serious conflict is emerging at Mercedes-Benz over the competitiveness of its German sites. According to media reports, management is demanding an increase in weekly working hours from 35 to 40 hours without additional pay.
If no agreement can be reached with employee representatives, a greater shift of production to Eastern Europe is reportedly also under consideration. Reports have even raised the possibility of closing a German plant. However, no specific closure decision has been made, nor has any affected site been named.
At present, the possibility of a plant closure should primarily be seen as leverage in ongoing negotiations, not as an approved production plan.
What the 40-Hour Week Dispute Is About
Mercedes is reportedly arguing that the costs of its German sites are not driven by wages alone. According to the reports, its internal assessment also considers sickness absence, public holidays, and the total amount of working time available.
The longer working week would not affect only employees in vehicle production. Development, administration, and sales staff could also be included. For the workforce, this would represent a substantial change because it would mean five additional hours per week without a corresponding pay increase.
At the same time, Mercedes could reduce its workforce by around 14% through retirements and natural attrition. This would allow the company to cut jobs without immediately launching a conventional redundancy program.
| Issue | Approach Under Discussion |
|---|---|
| Weekly working hours | Increase from 35 to 40 hours |
| Pay | No additional pay for the extra hours |
| Workforce | Reduction of around 14% through attrition and retirements |
| Production | Greater shift to Eastern Europe possible |
| German plants | Plant closure as a possible scenario, but no decision yet |
Hungary Gives Mercedes More Flexibility
The Mercedes plant in Kecskemét, Hungary, plays a central role. A new section of the plant is expected to increase its annual capacity from 200,000 to as many as 400,000 vehicles. This will allow Mercedes to distribute models and production volumes more flexibly between Germany and Hungary.
To achieve this, the manufacturer uses flexible production networks between Kecskemét and its German sites in Bremen and Rastatt. Standardized production structures make it possible to allocate individual model lines across several plants depending on capacity utilization, demand, and costs.
The economic leverage becomes particularly clear when costs are compared. According to company sources, factor costs in Kecskemét are around 70% below German levels. Additional capacity in Hungary → greater negotiating leverage over the German sites.
New Electric Cars Are Also Part of the Location Debate
The GLB and an electric C-Class are already manufactured in Kecskemét. The electric GLC is also planned for the site in the future. Other models could follow, although final allocations have not yet been decided.
Potential candidates include the CLA, the smaller electric G-Class, and the upcoming GLA. Based on current plans, the latter is initially expected to enter production in Rastatt as the electric successor to the EQA, as shown by the latest information on production of the new Mercedes GLA. The Mercedes CLA-Class is also one of the strategically important models in the compact segment.
For buyers in Germany, Austria, and Switzerland, a different distribution of production would not initially result in any technical changes to the vehicle. Indirectly, however, it could affect production ramp-up speed, delivery times, and logistics if Mercedes reallocates model lines between plants.
German Auto Industry Faces Cost Pressure
Mercedes is not alone in facing this conflict. Volkswagen is also engaged in intensive negotiations over plants, employment, and lower production costs. The dispute between the works council—an elected employee representative body—and corporate management illustrates the strain facing the German automotive industry.
High energy prices, fluctuating demand, and the transition to electric mobility coincide with growing competition from efficiently producing Chinese manufacturers. At the same time, European automakers must invest billions in battery technology, software, and new platforms.
No Closure Decision Has Yet Been Made
The reports mark a clear escalation, but they should not be mistaken for a decision that has already been made. The expansion in Hungary gives Mercedes a credible alternative, but closing a plant in Germany would be expensive, politically sensitive, and have significant consequences for supply chains.
The decisive question will therefore be whether management and employee representatives can find a compromise on working hours, productivity, and job security. For Mercedes, the issue is lowering costs; for the workforce, it is how much additional work is acceptable to safeguard German sites.
