Mercedes-Benz Expands Alabama Facilities, Deals With Labor Issues Ahead of C-Class Introduction
Mercedes-Benz has been making improvements to its manufacturing facility near Tuscaloosa, Alabama in anticipation of the introduction of the all-new 2015 C-Class. On December 18, Mercedes held a grand opening ceremony for a new 900,000 square foot parts logistics center at the plant. Mercedes claims the $70 million dollar facility will employ 600 people.
Most of those new hires will be contract employees working for outside suppliers, but some will be directly employed by Mercedes as transfers from existing facilities. The facility will handle daily parts deliveries as part of the just-in-time production method. Governor Robert Bentley was in attendance, remarking that “Mercedes has been a great partner for Alabama” since the plant opened. Mercedes began production at the facility in 1997.
Mercedes says that the addition of C-Class production will add about 1,000 employees at the facility in total. That number may increase in 2015, when the company plans to add another SUV to the production line. Auto Evolution claims that new SUV will probably be the next-generation GLK. This is yet to be confirmed by Mercedes, but it seems likely given that the C-Class is built on the same platform. It would also make a logical replacement for the aged and slow-selling R-Class. Mercedes discontinued R-Class sales in the United States last year, but still produces the vehicle in Tuscaloosa for the world market.
The expansion of the Tuscaloosa facility, like the founding of VW’s Chattanooga plant, has created waves in labor relations around the globe. Building cars in Alabama is part of a global production strategy that has seen Mercedes parent company Daimler shift more capacity to America. When Daimler announced plans to transfer C-Class production out of its Sindelfingen, Germany facility back in 2009, it led to mass protests by workers affiliated with the union IG Metall. IG Metall has since backed unionization efforts at both Daimler and VW’s American facilities by the United Auto Workers, out of fear of being undercut by cheaper American labor. The UAW has lobbied Tuscaloosa workers extensively with IG Metall’s assistance, but has had no success thus far. The continued expansion of the facility will undoubtedly focus ever-greater attention on labor relations and compensation at the plant.
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I actually believe our local laborers here in Alabama know that IG Metall (and to a lesser degree, the UAW) has some ulterior motives in trying to organize. After almost two decades of no success, I'm surprised they're still trying -- everyone I've known who has worked for the plant and its suppliers have been very pleased with the entire experience, from pay to benefits to specifically remaining a non-union shop. These people have an understanding that they can go work for an auto plant here for a 30%-50% wage increase over their existing non-auto jobs. They're not expecting to double their salaries and push their employer into obsolescence. It doesn't happen overnight, but with a global/mobile economy, people today have the benefit of hindsight -- it won't be like Detroit from 1950-1990 where the employers slowly shut down and move. It will be almost overnight thanks to manufacturing flexibility and worldwide competition.
American unions building German cars? Hasn't Mercedes and BMW learned their lesson? The ML still has significant quality issues, the 3 series Bimmer is no longer the ultimate driving machine and has lost its ranking to Toyota/Lexus. US Honda and Toyota has struggled for decades to meet stringent quality requirements with some improvement. American built Camry or Honda goes through numerous quality modifications before it can be exported for the Japanese market. I highly doubt the labor unions care about the end products its workers produce. It's just about lining up to punch out and get a paycheck without any company and brand loyalty. Unions are a very bad idea.