Daimler is planning to shift production of the next-generation Mercedes C-Class for the US market to its plant in Tuscaloosa, Alabama from Sindelfingen in Germany in 2014. At the same time it will move C-Class production for the European market from Sindelfingen to Bremen. In return, SL production will move in the other direction from Bremen to Sindelfingen.
Mercedes-Benz COO, Rainer Schmückle, said that the move to Tuscaloosa would help the company reduce the cost of C-Class production per vehicle by approximately €2,000 ($2,950) because of salary, logistics and duty costs savings. The move will make Daimler more independent of dollar exchange rates.
Unlike CKD assembly in Brazil, the C-Class will be locally produced at Tuscaloosa along with the R-, M- and GL-Class models for the US market, providing opportunities for additional suppliers based in the US. “We already have a broad supply base for our Tuscaloosa plant,” said Daimler spokesman Markus Mainka. “[But] due to the higher volume in connection with the additional production of the C-Class there will be additional opportunities for regional suppliers. In general, our selection process always follows the main criteria of quality, cost, innovation and supply.”
Daimler said it was too early to talk about potential partners. It also stated that it was too early to comment on how logistics patterns and contracts between Germany and the US will be affected by the move.
Alabama and the Tuscaloosa County Industrial Development Authority have offered Daimler as much as $100m in incentives. As well as tax breaks, the aid proposal includes $55m for training and $20m in economic development grants to be paid out over 10 years.
Tuscaloosa built its millionth M-Class in September this year.
In Europe the company has cited ‘optimised production’ as a means of cutting costs by shifting production to Bremen, referring to higher production efficiency through volume bundling of C-Class production there.
The company said it is confident it will be able to redeploy the 1,800 jobs affected by the moves within the company’s operations, though it faced opposition to the move from workers. Last week about 7,000 employees demonstrated at Sindelfingen, the largest Mercedes plant in Germany, while 3,500 rallied at Daimler’s base in Stuttgart, halting production for several hours.