By on December 3, 2009
(courtesy:emercedesbenz.com)

After writing about Spyker transferring production from the Netherlands to the United Kingdom, I thought I’d seen it all. Well, now I have. Production going OUT of Germany and into the United States. After much debating, Daimler have finally decided to switch some production from Germany to the United States. According to Reuters, roughly a fifth of Mercedes-Benz C-Class models will be built in Alabama by 2014, in hopes of protecting against currency fluctuations and maintaining profit margin. Naturally, the unions weren’t happy, in fact they downed tools in protest, claiming it was a “blatantly wrong decision.” Dr Z saw it differently, especially considering the move is said to be worth $100m in incentives from the state of Alabama.

“From a strategic and economic point of view, this step is absolutely necessary for Mercedes-Benz to remain competitive in the future and utilise its chances for growth,” Daimler Chief Executive Dieter Zetsche said in a statement on Wednesday. Not to mention a great chance to snag $55 million in training, as well as $20 million in state and local cash grants in addition to other Alabama tax abatements.

The union further claimed that 3000 jobs are at risk, which directly contradicted what Daimler’s personnel head, Wilfried Porth, said. He claimed that there would be no job cuts in Sindelfingen, where the C-Class is made, and that when the production comes online in the United States in 2014, it will create 1000 to 1200 jobs there.
So, Daimler’s management are happy because this move will maintain their profit margins, the United States will have extra jobs & more manufacturing, and the stock market reacted favourably with Daimler’s stock price rising 0.3% to €35.19 per share. It seems the only people not happy are the unions, even though Herr Porth said there would be no job cuts. Honestly, there’s no pleasing some people!
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18 Comments on “Mercedes C-Class Production Shifted To Alabama...”


  • avatar

    With one Euro buying $1.50, this makes eminent sense. With the dollar sliding more (which it will) jobs MUST come back to the States, because imports will become prohibitively expensive – except from the countries that have their currency pegged to the dollar.

  • avatar
    Gardiner Westbound

    Math isn’t my strong suit but no Sindelfingen job cuts doesn’t make sense, unless Black Forest elves built the C-Class production that is going stateside.

  • avatar

    This is how it will go down as of 2014
    - All of the C Class production ceases in Sindelfingen
    - 60 percent will be built in Bremen
    - 20 percent in the USA
    - 10 percent in China
    - 10 percent in South Africa

  • avatar
    John Horner

    “He claimed that there would be no job cuts in Sindelfingen, where the C-Class is made, and that when the production comes online in the United States in 2014, it will create 1000 to 1200 jobs there.”
    Wow, magic! No job cuts at home, but extra hiring in the US. I guess he is counting on a big unit sales surge, eh?
     

  • avatar

    Given the decline in the market for SUVs and luxury cars, I’m guessing the Alabama Mercedes plant has plenty of extra capacity.

  • avatar
    jmo

    And people say a weak dollar is a bad thing.  Too weak is a bad thing – a little weak can be great.

    • 0 avatar
      johnthacker

      A weak dollar is a sign of a bad thing, a weak economy. However, there’s a natural moderating response.  The weak economy leads to a weak dollar, which leads to us having less money to spend on things and being cheaper labor for the rest of the world.
       
      If our economy was already in better shape, the dollar would be stronger.  These jobs wouldn’t be coming here, that’s true, but it would be because other jobs would already be here, and/or various current jobs would be paying more.
       
      What you’re celebrating is that since the US economy is weak, we all took a paycut on the global scale, which made our labor relatively cheap, which moved jobs here.  It’s no different from saying “a little low wages can be great.”
       
      It’s like arguing that a little fever is great, because it stimulates the body’s immune response.  Or that the high gas prices that come from peak oil are great, because it makes us conserve oil so that our oil would last longer; a decent response, but it would better for oil supply to be enormous and gas prices to be low.

    • 0 avatar
      John Horner

      One of the reasons the dollar is so weak right now is the near zero interest rates dollar denominated deposits and bonds earn.

  • avatar
    Gardiner Westbound

    Dr. Z may be a serial fibber. I believe he termed the Daimler-Chrysler merger “a merger of equals?”

  • avatar
    jmo

    johnthacker,

    The euro is strong because of an excessively conservative ECB interest rate policy- not due to any fundamental strength or weakness in the eurozone or US economies.

    Indeed, if you look at current and projected debt levels and the future demograpic picture of the EU, the US is in a far better position than Europe.

  • avatar
    mikenem

    What will this do for Benz build quality? Looks like I’m definitely sticking with the old ones now.

    • 0 avatar
      John Horner

      Mercedes can build as good, or as bad, of a vehicle as they like in any of their factory locations. Engineering, purchasing and executive management are the prime movers of quality, not where the factory happens to be.
       

  • avatar
    psarhjinian

    What will this do for Benz build quality?
     
    Not much. As with VW,  Mercedes’ problem has never been where the car was built but how management decided it would be built.  If Toyota can screw Lexuses together in Canada that are rock-reliable, Mercedes et al really have no excuse.

  • avatar

    JMO: Exactly. Strength and weakness of a currency are not directly related to the strength or weakness of  its country.  Witness the obscene strength of the Yen. (Where are the enlightened folks  who claim that it is manipulated?)  The Japanese economy is not a prime example of strength. (The Yen is turning around as we speak, not due to the economy, but due to central bank action.) If  the EUR/USD  1.52 lebel is broken, next stop is 1.60 – and if that is taken out … I’ll be buying USD again!

    • 0 avatar
      John Horner

      “Strength and weakness of a currency are not directly related to the strength or weakness of  its country.”
      Except for in the case of China where the government pegs the local currency at a ratio to the US$.
       

  • avatar
    porschespeed

    What will this do for Benz build quality?

    Build quality is (mostly) about design and management.  Personally, I wouldn’t want to own any MBZ post-93/94.  The gadget fest is neat. When it works. Which is to say, not often enough.

    W140 is the last S-class that lives up to the ‘freight-train-panzerwagen’  reputation.  

    I hope they pull the quality back up to where it was, but the push to make MBZ a ‘volume player’ took a serious toll. 

  • avatar
    NickR

    Based on my experience with a German built C-Class, moving production to ‘Bama means their quality has nowhere to go but up.

    Regrettably, I doubt that it will as it has more to do with design and component sourcing than it does with the people putting it togtether (with some extreme exceptions). Pith these folks aren’t getting something good to build.


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