The German carmaking giant Daimler, owner of Mercedes-Benz, announced last month that it was to sell its factory in Hambach, north-east France, where the Smart city car, another of the group’s marques, has been produced since 1997. Daimler said the move was part of a cost-cutting, restructuring plan for its operations worldwide, citing the downturn in car sales due to the Covid-19 virus pandemic.
The news had come as a bolt from the blue for the around 1,600 plant and sub-contractor staff employed by the site close to the town of Sarreguemines, near France’s border with Germany, and which currently produces electric Smart cars. For while Daimler had made known in March 2019 that it would shift production of the small two-seater to China in 2022, in a 50-50 joint venture with Chinese carmaker Geely, it had indicated that the Hambach plant would be then dedicated to making a new compact electric vehicle for Mercedes.
“They announced the sale the day before we were to launch the production of prototypes of this new Mercedes model,” said Jean-Luc Bielitz, an official of the CGT trades union at the factory which is commonly called Smartville.
In preparation for its new electric Mercedes car, initially to be made alongside the Smart until 2022, Daimler had invested 500 million euros to upgrade the production lines at the plant along with the construction of new buildings covering a surface area of 70,000 square metres.
Enlargement : Illustration 1
“Daimler wants to sell, OK then, but we want them, before they leave, to set up an industrial project for the site, even if that means envisaging a reconversion,” Bielitz told Mediapart. “We also want all the jobs to be maintained at least for eight years, and if there’re pieces to pick up we believe that it’s for Daimler to pay out.”
The construction of the Hambach plant began in 1994, when Daimler and Swiss watch manufacturer Swatch, which was behind the initial concept of the fashionable city car, set up a joint venture to produce it – eventually becoming entirely owned by Daimler. The project was subsidised by both EU and French public funds, the latter totalling around 250 million French francs (38 million euros), as part of an effort to revitalise the region suffering industrial decline and a persistent high unemployment rate. When it opened three years later, this architectural model of a modern carmaking plant was inaugurated by then French president Jacques Chirac and then German chancellor Helmut Kohl.
Few people, if any, in Hambach and its surrounds doubt that the decision to sell the plant will have serious social consequences. “For us, the surprise is total, we’ve been knocked sideways,” said Daniel Muller, the recently elected mayor of Hambach, home to 3,000 inhabitants. “Here, in the shops, there is only talk of that. It’s going to cause damage. People are worried for their future. They have invested here, and many couples work together at the factory.” Just last year, the local authorities provided 1 million euros to help with the transformation of the plant. “The news comes in dribs and drabs, we have no contact with Daimler, no precise information,” said Muller.
“The state is aware that putting our factory on sale is a social timebomb,” said a statement by a committee of the plant’s trades union officials after a meeting in Paris on July 22nd with France’s junior economy minister in charge of industry, Agnès Pannier-Runacher. Two days later, about 150 local councillors and political party officials joined a march organised by the plant’s different staff unions in Sarreguemines to protest over Daimler's move which, as expressed in the slogans chanted by the crowd of around 1,000, is largely felt to be a "betrayal".
In September 2015, staff at the plant were bitterly divided over a management proposition to introduce a 39-hour working week in place of the legal 35-hour working week – a threshhold above which overtime or rest days are due – as introduced across France in a labour law reform by the then socialist government in 2000. Under what Daimler called its “2020 Pact”, and which unions said was presented as necessary to avoid production at the plant being moved abroad, the jobs at the plant would be guaranteed over the following five years, against a 12% rise in standard working hours and a 6% rise in salaries. A return to the 35-hour working week was envisaged for 2020.
Although not provided for under French labour laws, staff were asked to vote in a referendum over the controversial proposition, which returned a result of 56.1% in favour. Two thirds of those in managerial, supervisory and technical posts accepted the plan, while almost the same proportion among blue-collar staff rejected it. The position of the staff unions similarly reflected the divide.
The political Right in France has long been opposed to the 35-hour week, but has been afraid of the certain fierce opposition it would meet if it attempted to dismantle the reform. However, in 2015, former prime minister François Fillon, then bidding to become candidate for the conservative UMP party (now renamed Les Républicains) in approaching presidential elections, seized on the vote at the Smart plant to declare: “It is a lesson for all those, trades unions and politicians, who think that employees are viscerally attached to the 35-hours [working week]”. (Fillon, who promised the introduction of tough austerity policies, succeeded in becomings the UMP candidate, but his election campaign crashed after media revelations that he employed his wife and children out of parliamentary funds for work they never carried out. In June this year, he and his wife were found guilty of embezzling public funds, and have since appealed the sentence.)
It was the rejection of Daimler’s plan by the plant’s branches of the CGT and CFDT unions (two of the largest cross-trades unions in France), and which together represented a majority of staff (mostly blue-collar workers), that forced the the Smart plant's management to postpone introduction of the "2020 Pact". Instead, they presented it in new working contracts (for a 39-hour week paid as a 37-hour week) to be signed by staff individually, with the condition that the plan would be enacted if 75% of employees signed up to it by December 2015. In the end, it was accepted by 90% of staff.
Today, the announced sale of the plant appears timely with regard to the guarantee contained in the plan that no jobs would be lost between its introduction and 2020, although Daimler’s withdrawal from Hambach is not likely to be effective before many more months yet.
A total of around two million Smart vehicles have been produced in Hambach, but the plant’s annual production has slipped dramatically since the 80,000 cars that rolled off the production lines in 2017, latterly amounting to 25,000. The electric versions have not sold as well as hoped, due in part to their relative short range between battery charging of around 160 kilometres. Last year, production also fell due to a dispute with unions at sub-contractor Faurecia, which makes plastic panels for the Smart. They interrupted supplies in protest at having no guarantee of involvement with the new, nearly all-metal Mercedes model destined to be produced at Hambach.
Daimler meanwhile, along with the carmaking industry in general, has seen its overall sales crash this year due largely to the effects of the Covid-19 virus pandemic. Last month it announced its first quarterly loss in ten years, amounting to 1.2 billion euros in the second quarter between April and June, with operational losses of 1.6 billion euros. The group also blamed its poor performance on the fallout of the diesel emissions cheating scandal, for which it has had to set cash aside, and a mass recall of vehicles over a potentially fatal airbag defect.
Daimler CEO Olla Kallenius, who took up his post in May, last month promised to “intensify” savings measures and to “focus in the second half of the year on improving our operating performance and cash-flow generation”. He added that the details of where savings are to be made would be presentedl in November
Already last year the group announced a plan to axe 10,000 jobs among it worldwide workforce of 300,000, and German media have recently reported that the job cuts are likely to double in number to 20,000.
Pro-Brexit billionaire eyes Hambach instead of Wales
Following the announcement of the sale of the Hambach plant on July 3rd, a joint statement was issued by the president of the Grand Est greater region in which it lies, Jean Rottner, along with Patrick Weiten, head of the council of the local Moselle département (county), and the president of the federation of municipalities that include Hambach, Roland Roth, in which they described the decision as “incomprehensible”.
“Whereas the Grand Est region and all the public authorities in Moselle have never ceased to give support to the management in its investment decisions, it is regrettable that this decision be taken outside of any concertation or discussion,” they wrote.
Hambach mayor Daniel Muller said Rottner, who announced he had contacted President Emmanuel Macron in a bid for him to intervene, has asked for a meeting with Daimler’s management at its headquarters in Stuttgart, and described the support among local politicians of different parties in fighting to save the plant as “never before seen”.
In the Moselle département, part of the historic region of Lorraine, once a major industrial powerhouse based around now extinct steelworks and coal mining, carmaking accounts for around 21,000 jobs. “The blast furnaces have closed down, the coal mines have closed down, the two PSA [Peugeot-Citroën group] plants in the area are under threat, the Continetal [tyre] factory has suffered a 25 percent drop in production,” said CGT union official at Smartville, Jean-Luc Bielitz. “There’s a danger that not much will be left in this area.”
For the time being, just one potential buyer, Ineos Automotive, has expressed an interest in taking over Smartville. Ineos Automotive is the vehicle-making branch of British chemical and gas production company Ineos, founded and run by British billionaire Sir Jim Ratcliffe. The company, which apparently has Daimler’s support for a potential takeover, would use Hambach to build its future 4x4 vehicle, the Grenadier, which is a modernised version of the original Land Rover Defender that is now replaced and out of production.
There is a certain irony to the move; Ratcliffe, one of the wealthiest individuals in Britain (and rated by Forbes magazine as 73rd richest person in the world with a fortune of 74 billion dollars), is a fervent supporter of Brexit, and had originally planned to assemble the Grenadier, due for production in 2021, in Wales, at Bridgend, with the chassis and body parts produced in the Portuguese town of Estarreja.
The rugged Ineos offroad vehicle is to be powered by big-cylinder BMW diesel engines, a far cry from the electric city cars rolling out of Smartville. “We’d set off on the path of a ‘green’ factory, and we will no doubt be proposed with producing a large, very polluting vehicle,” said Jean-Luc Bielitz. “According to our research, to drive around with a Grenadier in France requires paying a carbon tax of 19,000 euros.”
Above all, everyone locally is in the dark about the exact details of the Ineos project. “Will Ineos re-employ all of the staff? We know nothing,” said Hambach mayor Daniel Muller.
Speaking in July, Daimler CEO Olla Kallenius told French magazine Capital that the group would be “creative and socially responsible” in trying to save a maximum number of jobs at Smartville. While Daimler wants to move swiftly and reach a deal with a buyer by mid-October, consultations between management and staff representatives have only just begun, and no in-depth discussions between the group and local politicians have yet been held.
Visiting the site last Thursday, junior economy minister Agnès Pannier-Runacher, who met with management and staff and also local elected politicians, told reporters that, “I share the surprise and anger of the Daimler employees regarding the decision to sell the site”. She said her ministry would have discussions with Ineos, but cautioned: “It’s an interesting project, the value of which we must look at to the very full.” She has commissioned an expert study of the Ineos project from an independent audit agency.
“Daimler must not shy from its responsibilities,” added Pannier-Runacher. “Daimler is responsible for the 1,600 people who work at this site, and who have always answered present. Today, it’s Daimler’s turn to answer present by providing a quality purchaser, but also thinking about other projects that could be initiated at this site to ensure that a future is given to all of the 1,600 who work here.”
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- The original French version of this report can be found here.
English version with updating by Graham Tearse