Mercedes Concludes Union Negotiations

DaimlerChrysler’s Mercedes unit has concluded negotiations with unions. The agreement between the two sides allows Mercedes to realise cost savings of 500 million euros that will take effect in 2006 and 2007, the company says.

The agreement also appears to have eliminated a previously agreed pay rise of 2.8 per cent, which was due to be introduced into the company’s pay structure in 2007. The deal includes unspecified adjustments to the labour contract rules of the company’s Sindelfingen plant that bring it closer to the rules applied in Bremen. The planning and development departments will also return to a 40 hour week and more flexible working hours, as a result of the discussions.

Although most of the plans won’t come into effect for at least a year, a cost cutting exercise that yields 500 million euros of savings must be significant. The down side, for Mercedes, is that the cost savings need to be off-set against negative pressures from pricing and currencies. Also, although a positive step for workers, the agreed employment guarantees for the Sindelfingen, Untertürkheim, and Mannheim plants, limit the company’s ability to react to changing market conditions.