Daimler moving some C-Class production to Alabama

AP News
Posted: Dec 02, 2009 4:51 PM

German carmaker Daimler AG said Wednesday it will move production of some Mercedes-Benz sedans to its Alabama plant, part of plans to cut manufacturing costs and take advantage of a growing U.S. market for the automaker's luxury vehicles.

Daimler, based in Stuttgart, said production of the new generation of the C-Class, one of Mercedes' more compact lines of sedans, should start in 2014 at the plant at Vance, near Tuscaloosa.

The move could add about 1,000 jobs to Daimler's Alabama operations, which employ about 2,800 workers making vehicles that include Mercedes SUVs and crossovers. Daimler said further investments will be made at the plant, but didn't provide details.

Daimler expects U.S. demand to increase, making it "essential" to put production near the expanding U.S. market, according to Rainer Schmueckle, Daimler's chief operating officer. The C-Class series is already the best-selling Mercedes model in the United States.

The decision has caused anxiety among German autoworkers who fear that the automaker is trying to shift jobs overseas.

Daimler said the new Alabama production would protect jobs in Germany over the long term and that employment levels at its Sindelfingen plant in southern Germany, the largest Mercedes-Benz German car plant, would be maintained.

"We are aware of our Sindelfingen employees' great emotional attachment to the C-Class and we recognize the outstanding work that they perform every day. So this decision was not made easily," Dieter Zetsche, the company's chief executive said in the report, adding that "Germany is and will remain at the heart of our production network."

But workers at Sindelfingen protested for a third day Wednesday over Daimler plans to move around production. That includes shifting European production of the C-Class to a plant in Bremen and manufacturing the SL sports coupe at Sindelfingen beginning in 2014. About 1,800 employees at Sindelfingen would be without work because of the change, but Daimler said they will be offered other jobs.

The workers' council at Bremen also voiced its concerns on the moves.

Juergen Coors, a Bremen workers' council spokesman called it a basic decision to "leave Germany as a production location," and criticized the company for "making decisions over the heads of workers."

Daimler currently makes the C-Class Mercedes line in Germany, South Africa and China. The plans to move work to the United States means that about 20 percent of C-Class vehicles will be made at the Alabama plant. The C-Class is the least expensive of its lines of vehicles sold in the United States, starting at $33,600. Most models are more compact and have less horsepower than Mercedes' more expensive lines.

The automaker will get as much as $100 million in incentives from Alabama as it expands production there. Alabama Gov. Bob Riley's office said Wednesday the incentives include $55 million for work force training over 10 years and $20 million in grants over the same period.

Officials in the mainly rural west Alabama, where unemployment is in the mid-teens, welcomed the news. A $300 million expansion already is under way at the factory, but employment is down from a peak of about 4,000 before the recession hit.

"The good news is we have a Mercedes plant that is expanding. From a community standpoint, it helps us position ourselves for when the economy turns around," said Johnnie Aycock, president of the Chamber of Commerce of West Alabama.

The lack of unions at the factory "doesn't hurt," Aycock said, but added: "This is such a productive plant. They're very cost effective ... because they started from scratch almost. They put in an entirely new production system that's being replicated around the world."

Daimler is investing about euro3 billion ($4.5 billion) in its German sites to expand and upgrade.

The company said Wednesday Sindelfingen would become more of a central technology and research facility of Mercedes-Benz cars and a center for premium-class and luxury cars which would work increasingly with alternative powertrain systems.

Bremen will become the C-Class production center for European markets and will become the center for that high-volume series. Daimler expects a 20 percent production increase in the C-Class starting in 2014.

Daimler said its Rastatt plant in the southwest of the country would remain its production center for its smaller A-Class and B-Class series cars. The company also builds its Smart compact in Hambach, France.

Shares of Daimler were about a third of a percent higher at euro35.22 ($53.01) in Frankfurt afternoon trading.


Associated Press Writer Jay Reeves in Birmingham, Ala. and AP Business Writer Stephen Manning in Washington contributed to this story


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