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Mercedes-Benz realigning global production organization for passenger cars; organizing by product architecture

Mercedes-Benz is realigning its global passenger cars manufacturing activities and is strengthening its German passenger cars locations with investments worth billions of euros. “We want to continue to grow and will significantly increase our production capacities in the coming years. At the same time we want to permanently and sustainably strengthen our competitiveness with a high-performance organization,” said Markus Schäfer, Member of the Divisional Board of Mercedes-Benz Cars, Production and Supply Chain Management, during a media event at the Mercedes-Benz Sindelfingen plant.

This year alone, Mercedes-Benz is managing 18 vehicle ramp-ups at eight locations worldwide, among them the start of production of the new C-Class sedan on four continents. Through 2020, Mercedes-Benz will introduce and additional 12 models which do not have a predecessor.

As well as stepping up its international activities, Mercedes-Benz is strengthening it German plants with investments of more than €3 billion (US$3.9 billion) this year.

  • At the Sindelfingen plant, more than €1 billion is being invested primarily for future products.

  • Another €1 billion go to the Untertürkheim core plant, amongst others for the expansion of engine production.

  • The Bremen plant’s capacities will be increased with around €750 million.

  • Further investment also goes to the Rastatt compact car plant, where the fully-electric B-Class electric drive has been seamlessly integrated into series product

Mercedes-Benz sales top one million mark in August
Mercedes-Benz sold more vehicles worldwide last month than in any previous August: 118,887 units (+9.7%).
Since the beginning of the year, Mercedes has grown unit sales to a new record high of 1,032,410 units (+12.3%), topping the million mark in unit sales one month earlier than in the previous year.
Sales in the Asia/Pacific region showed very strong growth: Last month’s sales in that region totaled 37,591 vehicles (+15.8%). In August, 21,398 vehicles were handed over to customers in China (+18.3%); year-to-date sales there are up +31.5%.

The new manufacturing organization Mercedes-Benz Operations (MO) is based on global production networks and centralized responsibility for logistics and quality.

Under our previous production structure, the individual plants operated largely autonomously. Now, manufacturing will be organized according to product architectures, independent of individual locations.

—Markus Schäfer

These product architectures comprise the rear-wheel drive architecture (MRA); the front-wheel-drive architecture (MFA); the architectures for SUVs (MHA) and sports cars (MSA) as well as the powertrain architecture (MPA).

The MRA production network (S-, E-, C-Class) is led by Andreas Kellermann, who was previously head of the Bremen plant. Michael Göbel is now in charge of global compact car production (A-, B-Class, CLA, GLA and in the future CLA Shooting brake), having previously overseen roadster production in Bremen.

Production of SUVs (M-, R-, GL-, and G-Class) and sports cars (SL, SLK) is the responsibility of Jason Hoff, who also retains his existing role as President and CEO of Mercedes-Benz US plant in Tuscaloosa/Alabama (MBUSI). Peter Schabert, who has been responsible for global powertrain production since 2010, will continue in this position unchanged.

Each vehicle and powertrain architecture will draw on a system of modules and components. The new C-Class is the first model series to be built entirely in accordance with this principle. The C-Class is Mercedes-Benz’s highest-volume model series and went into production on four continents within just six months earlier this year: Bremen came first in February, followed by the East London plant (South Africa) in May, the Tuscaloosa plant (USA) in June, and the BBAC plant in Beijing (China) in July.

Within the global production network, Bremen is the lead plant and manages all aspects of C-Class production, from the tooling strategy and quality assurance to the training of colleagues from other sites worldwide. Around 500 employees from plants outside Germany have received intensive training so that, as multipliers, they can pass on their knowledge within their home plants.

Our German passenger car and powertrain plants form the backbone of our global production network. The achievements of the teams in all four plants are second to none: they have done an outstanding job in launching the C-Class at four sites in such a short space of time.

—Markus Schäfer

Another key factor in the new organization is centralized supply chain management, in which all stages of the supply chain must be seamlessly integrated, from the supplier right through to the end customer.

We still face great challenges in this field, at the same time there is also huge potential for reducing costs and increasing efficiency.

—Markus Schäfer

Global production networks bring Mercedes-Benz closer to the different markets and customers and enable it to respond more quickly to changes in demand, because production can be adjusted in individual plants. At the same time, manufacturing in other currency areas enable exchange rate volatility to be evened out.

This flexibility includes having different variants on the same assembly line, factory equipment being used for several vehicle generations, and working hours that can be varied depending on demand. By standardizing and modularizing its plants, Mercedes-Benz intends to contain the level of capital expenditure needed and reduce fixed costs.

The expansion of alliances, establishment of joint ventures, and use of capacity at contract manufacturers play an important role in Mercedes-Benz’s growth strategy.

At the end of June, Daimler announced that it was setting up a production joint venture with the Renault-Nissan alliance, stepping up their existing cooperation. The partners intend to build a new generation of compact cars at a new factory in Aguascalientes, Mexico, which will have a total annual production capacity of 300,000 units. (Earlier post.)


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