Daimler plans to sell Smart plant in Hambach – French government intervenes

The carmaker is adjusting its capacities to the weak market situation. The Smart, which has so far been produced in Hambach, is to be built in China in the future.

Smart production at Hambach plant

The carmaker Daimler wants to sell its plant in Hambach, France. The group announced on Friday that it intended to adjust and realign its global production capacities to the expected development of the market. “That is why we intend to start discussions about the sale of the Hambach plant,” announced CEO Ola Källenius.

The step is connected with the high investments in electromobility and digitalization, which forces the group to take measures to increase efficiency. This affects all areas of the company worldwide.

“In addition, the effects of the Covid 19 pandemic on the economy are creating new framework conditions in the market, and in this context we are optimizing our global production network,” said Källenius. Daimler employs around 1,600 people in Hambach.

Mercedes added that the valuation effects associated with the sale would lead to a negative one-off effect in the middle three-digit million amount, which would have an impact in the second quarter. Further burdens could arise in the further course of negotiations.

Hambach plant, aerial view

According to Daimler, the current electric models of the Smart should continue to roll off the assembly line in Hambach. The next generation of the city car will build the joint venture between Daimler and major shareholder Geely in China. Daimler and Geely want to launch new fully electric smart models on the market and sell them worldwide from 2022.

France’s Economics and Finance Minister Bruno Le Maire responded just a few minutes after the Daimler plans were announced. “The Hambach location is a symbol of German-French industrial relations,” said the minister about the plant near the German border. The employees have always advocated social dialogue to ensure the plant’s competitiveness. Le Maire approached the carmaker head-on and demanded: “Daimler must keep all options open – including those to continue the plant.”

The Smart plant in Hambach is not just a factory for the French government. In a way, the work made industrial history. A few years ago, when Daimler asked the employees to make a financial sacrifice to further develop the location, there was a tough internal conflict. Not only the radical but also the moderate unions opposed Daimler’s intention – with the indication that the workers had already made sacrifices.

Le Maire is not going to let go easily

The then plant manager, who has since left, organized a ballot in the plant. The majority of employees decided to extend working hours without wage compensation. After several weeks of discussions, the result of the vote was implemented.

In a way, Hambach has become a symbol in France for the fact that the willingness of workers leads to concessions to secure jobs. Daimler’s intention to sell the plant now acts as a provocation for the French.

Smart production at Hambach plant

From Daimler’s perspective, the plans are understandable given the weak sales of the Smart. Renault, which produced the four-door Smart in its Novo Mesto plant as a Twingo and developed the model, said that the planned Hambach sale would not affect Renault because the carmaker was not producing the two-door version.

Minister Le Maire indicated that he would not let go so easily. To Daimler, he said: “I want the future of this modern and exemplary location to be safeguarded, which has opted for the ecological turning point by producing electric cars. With his announcement, Daimler consciously or unintentionally entered a conflict that had only just begun.

Contact the author: coreymclaughlin@wheelsjoint.com

Inline Feedbacks
View all comments