Executives at Mercedes-Benz have warned employees of potential plant closures and job cuts amid concerns over high production costs in Germany. The company’s production chief, Michael Schiebe, indicated that operations at manufacturing sites, including engine and powertrain facilities at the company’s historic Untertürkheim plant in Stuttgart, could face shutdowns if cost reductions are not achieved.

Speaking to workers, Schiebe described the current production environment in Germany as uncompetitive compared to international standards, largely attributing this to elevated labor expenses. “Our clear goal is to maintain all of our German locations,” he said, “but if we are unable to do this, we will have to close one German assembly plant and one German powertrain plant,” according to a company statement and reports.

The announcement follows a backdrop of broader challenges facing European automakers, including declining vehicle sales in the Chinese market, tariffs imposed by the United States, and the significant investment required to transition to electric vehicle production. These pressures have led other manufacturers, such as Volkswagen, to consider or enact plant closures and workforce reductions.

The warning from Mercedes-Benz management has met with strong resistance from employee representatives. An official from the company’s general works council criticised the use of closure threats as a negotiation tactic, stating, “Threatening plant closures is no way to shape the future. Anyone who resorts to such threats must expect our determined resistance.” The representative further asserted that management’s approach of demanding workforce concessions under the threat of closures would not be tolerated.

Mercedes-Benz emphasised the need for a regulatory and industrial framework conducive to productivity improvements within Germany, highlighting the importance of competitive conditions for sustaining operations in the country.

As automakers navigate shifting global markets and the transition to electrification, the fate of longstanding manufacturing sites like Untertürkheim remains uncertain, with company leadership signalling that decisive measures may be necessary to secure financial viability.