Fluctuations and disparities in currency exchange rates have grown to become a significant factor in determining where foreign automakers in particular assemble their vehicles. Mercedes-Benz is among those carmakers most cognizant of these effects, and it has been assembling select models in the United States to meet local demands. Now the German automaker has announced that, for the next generation of its popular C-Class sedan due in 2014, partial production will shift to its assembly plant in Tuscaloosa, Alabama, where the M-Class, R-Class and GL-Class crossovers are already built.
The shift in production – which is set to comprise no more than one-fifth of global C-Class production – will not only help offset currency rates, but also afford greater flexibility in meeting local customer demand. The move is expected to further upset Germany's automotive workforce, which has grown restless in the wake of General Motors' collapsed sale of Opel.
In addition to the partial shift to Alabama, German production of the remaining four-fifths of C-Class production is set to switch places with the SL-Class roadster, the former moving from Sindelfingen to Bremen and the latter vice-versa. Full details in the press release after the jump.
Mercedes-Benz Cars increases growth opportunities and protects employment
* Production of next-generation C-Class bundled in Bremen plant
* In return, transfer of SL assembly to Sindelfingen
* Employment in Sindelfingen plant will be maintained
* Additional production of the C-Class in Tuscaloosa plant, USA
* Dr. Dieter Zetsche: "Germany is and will remain at the heart of our production network."
Stuttgart - The Board of Management of Daimler AG decided on the further development of Mercedes-Benz Cars' global production network. In connection with the launch of the next generation of the C-Class, important preparations will be made in the period from 2014 on so that Daimler maintains its competitiveness, utilizes the growth opportunities presented around the world, and is able to protect jobs in Germany over the long term.
Dr. Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars: "We are aware of our Sindelfingen employees' great emotional attachment to the C-Class and we recognize the outstanding work that they perform every day. So this decision was not made easily. But this step is essential for strategic and operational reasons, so that Mercedes-Benz remains competitive and can fully utilize future growth opportunities."
The decision to produce the C-Class closer to the markets will make Daimler more independent of exchange rates, will optimize its profitability in this price-sensitive segment, and will allow it to fulfill regional customer requirements even faster and more flexibly. Zetsche continued: "This decision will also help to protect employment at our sites in Germany over the long term. Germany is and will remain at the heart of our production network."
Expansion of competence centers and investment in Germany
The importance of the Sindelfingen plant will be enhanced as a central technology and research facility of Mercedes-Benz Cars and also as a worldwide competence center for the production of premium and luxury automobiles, increasingly with alternative powertrain systems.
The production of the C-Class sedan for markets in Europe and of the other C-Class model versions will be concentrated at the Bremen plant in the future, and that plant will be the competence center for this high-volume series. In order to facilitate an increase in production volumes of about 20 percent as of the year 2014, the assembly of the SL premium roadster will be transferred from Bremen to Sindelfingen in that year. The expanded production of the C-Class will protect the jobs of the workforce in Bremen in the long-term.
The central production of Mercedes-Benz compact cars will be at the Rastatt plant, as in the past.
Daimler recently affirmed its clear commitment to production sites in Germany and announced that it will invest approximately three billion euros at its domestic passenger car locations in the years 2009 and 2010.
Additional local production in the United States
In order to benefit even more from growth opportunities and in particular from market developments in North America also with a strong euro, the C-Class sedans for that region will be produced at Mercedes-Benz U.S. International in Tuscaloosa, Alabama as of 2014. From today's perspective, this additional production facility will represent less than one-fifth of the total C-Class model range. At MBUSI, further investments will be made in the existing capacities at that plant. As well as the additional model series, the plant will continue to produce the R-Class, the M-Class and the GL-Class.
This further development of Mercedes-Benz Cars' worldwide production network is not least intended to reflect changes in markets and sales regions. Due to the projected demographic developments in the United States, the automobile market in that country will further strengthen its already important role, opening up additional growth opportunities. To make optimal and competitive use of those opportunities, it is essential to have production facilities of the high-volume C-Class close to the market. The sedan version of the series is already the best-selling Mercedes-Benz model in the US market.
Active employment protection and optimal organization of production
"It is very important for us to provide our employees with a clear and stable outlook for the future by optimizing the allocation of resources in our production network, by strengthening the competencies of the respective sites, and by means of alternative working arrangements," stated Wilfried Porth, Member of the Board of Management for Human Resources and Labor Relations Director at Daimler.
The personnel concept for the Sindelfingen plant will allow the employment effects resulting from the reorganization of C-Class production as of 2014 to be considerably offset by the assembly of the SL. As part of various initiatives, the remaining approximately 1,800 employees affected will be offered attractive employment opportunities. With those measures, employment of the Sindelfingen C-Class employees can be maintained.
"Due to the tough competition in the C-Class segment, it is extremely important for us to optimize our production costs for the future," stated Rainer Schmückle, Chief Operating Officer of Mercedes-Benz Cars. "This applies not only to our direct production costs, but also to the import-duty and logistics advantages of each production site. But it is just as important for us to be able to offer alternatives to the Sindelfingen C-Class employees affected by this decision in order to maintain their employment. We are convinced that our concept fulfills this criterion."