GERMANY [updated 13:35GMT]: Mercedes to build C-class in US
German production of the next-generation Mercedes-Benz C-Class due out in 2014 will be moved from Sindelfingen to Bremen while US production will be at the company's Tuscaloosa, Alabama, factory, Daimler said on Wednesday.
The move would allow Daimler to save EUR2,000 (US$3,000) per vehicle thanks to "lower salary levels" in the US, operating director Rainer Schmueckle told a telephone press conference.
Though SL assembly would, "in return", be transferred from Bremen to Sindelfingen and employment levels there "will be maintained", the move will see 1,800 workers building the current C-class at Sindelfingen redeployed within Daimler, the automaker said in a statement.
"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."
"It is very important for us to provide our employees with a clear and stable outlook for the future by optimising the allocation of resources in our production network, by strengthening the competencies of the respective sites, and by means of alternative working arrangements," Daimler labour chief Wilfried Porth said.
Daimler has previously used its Brazilian plant, originally built in the mid-1990s for the first generation A-class, to assemble North America-bound C-class sedans from CKD kits shipped from Germany but this will be the first time the popular compact model line has been assembled in the US.
Brazil ended C-class sedan output in 2006 but production of the three-door C-class sportscar was subsequently transferred there from Sindelfingen early in 2007, again using CKD kits produced in Germany. M-B Brazil aimed to boost local content to 35%. Brazil remains the sole source plant for that model, a Mercedes spokeswoman confirmed on Wednesday.
Tuscaloosa currently builds large SUVs and crossovers designed primarily for North American markets though a proportion is exported worldwide.
Earlier this week, German media said Sindelfingen employees had specifically asked the company not to move the C-Class to the US - the workers' council claimed that would put about 3,000 jobs in Sindelfingen at risk.
Mercedes-Benz Cars chief Dieter Zetsche said: "Germany is and will remain at the heart of our 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, utilises the growth opportunities presented around the world, and is able to protect jobs in Germany over the long term.
"We are aware of our Sindelfingen employees' great emotional attachment to the C-Class and we recognise 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."
Daimler said building the C-Class closer to its markets (the current model is also assembled in China and South Africa) will "make Daimler more independent of exchange rates, will optimise its profitability in this price-sensitive segment, and will allow it to fulfil regional customer requirements even faster and more flexibly.
Zetsche added: "This decision will also help to protect employment at our sites in Germany over the long term."
The Sindelfingen plant will become a central technology and research facility for Mercedes-Benz Cars and also a worldwide 'competence centre' for the production of premium and luxury cars , increasingly with alternative powertrain systems, Daimler added.
Production of European market C-Class sedans and of all other C-class model variants would be concentrated at Bremen and that plant would become the competence centre for that high-volume series, it said.
In order to increase production by about 20% from 2014, SL roadster assembly would be transferred from Bremen to Sindelfingen that year.
"The expanded production of the C-Class will protect the jobs of the workforce in Bremen in the long-term," the automaker said.
Production of Mercedes-Benz compact cars (A- and B-class) would remain concentrated at Rastatt.
Daimler reiterated it had recently affirmed its clear commitment to production sites in Germany and said it would invest about EUR3bn at its domestic passenger car locations in 2009 and 2010.
Daimler said US production would account for under 20% of the total C-Class model range. Tuscaloosa, too would receive further investment. As well as adding the C-class, the plant will continue to produce the R-, M- and GL-Class models. The plant produced 152,561 vehicles in 2008.
Mercedes-Benz sold around 251,000 cars in the United States last year, compared with global sales of about 1.13m vehicles. This year's sales to the end of November were down 19.4% to 184,477 units, according to WardsAuto.com data released on Wednesday.
Daimler said the production reshuffle reflected changes in its 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," it said.
"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."
"Due to the tough competition in the C-Class segment, it is extremely important for us to optimise our production costs for the future," added Mercedes-Benz Cars chief operating officer Rainer Schmückle.
"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 fulfils this criterion."
In March 2008, Daimler's German-based rival BMW said it would spend $US750m expanding its own southern US plant to boost production capacity from 160,000 to 240,000 units by 2012.
The Spartanburg plant would grow 60% to 370,000 m², and 500 new jobs would be created, BMW said at the time.
"The expansion will also lead to a hike in purchase and export volumes into and out of the NAFTA region, which will contribute considerably to the BMW Group's natural hedging strategy," the automaker said then.
After the expansion, Spartanburg will make the X3, X5 and X6 models for world markets and the Z4 sportscar production would be made in Germany - the model line has been made mostly in the US since the first generation was launched in the 1990s.
"Centralising our know-how for X models in Spartanburg will enable us to work even more efficiently going forward. In addition, it was a logical step for the BMW Group as a global player to increase production capacity in its largest market," BMW board member Frank-Peter Arndt said in 2008.