Mercedes keeps the Basque economy on edge | Economy

Several workers enter the Mercedes factory in Vitoria on Tuesday.
Several workers enter the Mercedes factory in Vitoria on Tuesday.L. Rico (EFE)

The Basque industry is following the open labor dispute at the Mercedes-Benz factory in Vitoria very closely and with concern. The shock wave has reached the leadership of the Government chaired by Iñigo Urkullu. The management of the automobile firm and the unions are unable to reach an agreement to renew the agreement. This Tuesday they have failed again in their attempt to sign peace. New days of strike are approaching and the investment of 1,230 million euros that the German company has promised for the Vitoria plant is hanging by a thread. When this company, the most important in the Basque Country with 5,000 employees, shows signs of instability, the entire economic panorama of the community falters.

Mercedes is a heavyweight in the Basque economy. In addition to the 5,000 people it has on its payroll (about 500 of these are temporary), it generates around 30,000 indirect jobs. It contributes 5% to the Basque Gross Domestic Product (GDP). It is a key player in the Basque automotive components sector, one of the most competitive and innovative in the world, according to the Acicae cluster. Guillermo Dorronsoro, professor of Strategy and Innovation at Deusto Business School, believes that the company “is important in itself, for all the employment and wealth it generates”, but it acquires an extra dimension due to the great influence it exerts on the economic environment : “Mercedes sends a signal to other multinationals: if it stays in the Basque Country it is because this is an attractive territory for large investments”.

On June 22 there was a “historic” strike in the 20-year history of this company in Vitoria. The call of the unions was widely supported (only the temporary ones worked) and managed to stop production that day and in the two days of strike that followed at the end of that month. An average of 700 vehicles are assembled daily. The protest prospered due to the lack of progress in the 18 months of negotiations to approve a new agreement. The workers are demanding a salary increase equal to the increase in the CPI and that the management withdraw its proposal to introduce a sixth night shift during the week, in addition to other improvements in their conditions.

The company that Emilio Titos has chaired in Spain since 2008 links the signing of the new agreement with an injection of 1,230 million euros that the multinational is willing to invest in the long term to modernize the current facilities and improve the production and assembly processes of the two models currently being manufactured (Vito and Class A), in addition to expanding the factory and thus doubling its production capacity. “It’s a maneuver by the company to lower our job expectations,” says a factory worker: “It’s a kind of blackmail to which the institutions have joined to put pressure on and divide the workforce,” he adds.

The Basque Government does not want to lose this opportunity under any circumstances. 1,500 kilometers from Vitoria, the Lehendakari meets this Wednesday at the Mercedes-Benz headquarters in Stuttgart with CEO Mathias Geisen. Urkullu and the Minister of Economic Development, Arantxa Tapia, come to this meeting with a clear message: the Basque Country is the best place for Mercedes to invest in expanding its factory, the second largest of the German firm in the world. Professor Dorronsoro maintains that “The Basque Country has to coexist with centers of power that are abroad, as is the case with Michelin or Siemens Energy, and for this reason it must be configured as an attractive environment for these companies.” And he adds that Mercedes plays a very important role at a time when “there are many investments at stake as a result of the energy transition and digital transformation processes that are taking place in areas such as battery manufacturing or hydrogen production.”

The investments that Mercedes has announced in Spain are linked to a strategic project, called Basquevolt, the future solid-state battery factory to be installed in the Álava Technology Park, in Juzdiz, which will involve an investment of 700 million and is expected to generate 800 direct jobs. Basquevolt is promoted by a consortium of investors, including Iberdrola, CIE Automotive, Enagas, EIT InnoEnergy and CIC energyGUNE, and is one of the Basque Country’s big bets to position itself in Europe in the production of electric cars. Mercedes has already given its commitment to be a customer of this battery cell factory. The ability to attract European funds requested from the automotive PERTE also depends on its success.

The German company is a strategic pillar, hence the constant appeals made by the Basque leaders to reach an agreement that unblocks the disagreement between the management and the employees. At the last meeting, the company offered, among other improvements, a payment of 2,000 euros from 2021 and a salary increase of 5% for this year and 2% between 2023 and 2026, in addition to an extra 750 euros from this year and a bonus of 500 euros for productions greater than 200,000 vans (currently around 150,000 units are manufactured annually).

The proposal has not convinced the plants, although there is no unity among them either. UGT, CC OO, PIMM and Ekintza, who make up the majority in the committee, admit “progress” at the negotiating table, although they consider that these are “insufficient”. All of them have dropped from the strike that all the unions had called for this Wednesday, coinciding with Urkullu’s visit to Mercedes. ELA, LAB and ESK, on ​​the other hand, maintain the mobilization because the offer does not fully satisfy the demands of the workers, especially with regard to the introduction of the sixth night shift, one of the main issues of the discussion.

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