Mercedes-Benz Confirms C-Class Production in U.S.
December 02, 2009

In a significant signal of the cost pressures on global manufacturers, Daimler AG announced Wednesday that its Mercedes-Benz premium-vehicle division will transfer some production of its entry-level C-Class sedan to the U.S.

The company said "additional production" of the C-Class will be added at the Mercedes-Benz U.S. International assembly plant in Tuscaloosa, Alabama, when the next-generation C-Class is launched in 2014.

The MBUSI Tuscaloosa plant, which began production in 1997, currently builds Mercedes' M-Class, R-Class and GL-Class crossover vehicles and has been expanded twice.

Mercedes' plan to designate C-Class production outside of Germany is certain to stoke more fires with the country's labor unions, already on high alert by other recent threats to the nation's high-cost labor base, including pivotal manufacturing decisions related to General Motors Co.'s now-aborted plan to sell its Adam Opel AG operations.

"This step is essential for strategic and operational reasons, and helps the company to remain competitive and to fully utilize future growth opportunities," said Daimler Chairman Dieter Zetsche.

Exchange Rates Putting a Hurt on Profits

It has long been believed that the continuing weakness of the dollar has led to exchange-rate vagaries that are severely impacting the bottom line for every European automaker. In a release, Daimler indicated the decision to move C-Class production to the U.S. is being driven by a need to decouple profits from exchange rates -- but also purportedly will enable Mercedes to more swiftly answer changing customer tastes and preferences.

"The decision to produce the C-Class closer to the markets (in which it is sold) will make Daimler more independent of exchange rates, will optimize its profitability in this price-sensitive segment, and will allow it to fulfill regional customer requirements even faster and more flexibly," Daimler said.

Perhaps to ease the decision's impact in Germany, Daimler said C-Class models produced at MBUSI for the North American market will comprise less than one-fifth of total C-Class production.

"Due to the projected demographic developments in the United States, the automobile market in that country will further strengthen its already important role, opening up additional growth opportunities," Daimler's release continued.

"To make optimal and competitive use of those opportunities, it is essential to have production facilities of the high-volume C-Class close to the market. The sedan version of the series is already the best-selling Mercedes-Benz model in the U.S."

Other Manufacturing Moves

With the start of production of the next-generation C-Class, Mercedes also apparently will transfer German production of the C-Class from its current plant in Sindelfingen to Bremen.

In turn, production of the SL roadster -- a much lower-volume model -- will shift from Bremen to Sindelfingen, which Daimler says will become "a central technology and research facility of Mercedes-Benz Cars and also as a worldwide competence center for the production of premium and luxury automobiles, increasingly with alternative powertrain systems."

Daimler seems to indicate the moves will affect jobs, however. The company said addition of SL production at the Sindelfingen plant in 2014 will "considerably offset" the loss of C-Class assembly. But it says some 1,800 employees will be offered "attractive employment opportunities. With those measures, employment of the Sindelfingen C-Class employees can be maintained." -- Bill Visnic, Senior Contributing Editor

Photo by Mercedes-Benz

2010 Mercedes-Benz C-Class

 

 

 
 
 

 

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