Mercedes-Benz UntertürkheimGermany – The company and works council have agreed on a transformation plan for Daimler’s original plant, founded in 1904. The upgrade involves an investment of about €1 billion ($1.1 billion) this year alone, but will bring cost savings of “hundreds of millions” up to 2020, says the OEM.

“We are not only improving our flexibility and efficiency, but also developing a plant with a tradition stretching back over 110 years into a high-tech location for CO2 technologies,” said Markus Schäfer, member of the board, Mercedes-Benz Cars, Manufacturing and Supply Chain Management.

With a workforce of 18,700 personnel, Untertürkheim has been operating at a high level of utilisation for multiple years, contributing to last year’s record for Mercedes-Benz Cars of over 1.75m units produced and 1.72m sold. Furthermore, the OEMs says its 2020 growth strategy takes into account predictions of “significantly rising production volumes in the mid-term”.

Mercedes says Untertürkheim will become a centre of competence for the production of highly efficient engines, hybrid powertrains and fuel-cell systems. From June 1, the plant will assume responsibility for a facility at Nabern in the greater Stuttgart area where fuel-cell assembly will take place; Nabern will remain in charge of overall fuel-cell development, under the guidance of Daimler.

The traditional production of engines, transmissions, axles and components at Untertürkheim will be thoroughly religned and further capabilities added. Mercedes says the focus of its streamlining and modernisation efforts will be “to keep in-house products with competitive relevance and to assign other tasks to suppliers”. The foundry at Esslingen-Mettingen and the forge at Untertürkheim will remain integral parts of the plant, the company confirmed.

Untertürkheim’s capacity for engine assembly will be increased significantly, with the addition of two new gasoline engines and a new four-cylinder diesel engine. In terms of transmissions, the plant will focus exclusively on production of automatic transmissions for rear-wheel drive vehicles, while assembly lines are built up over the next few years.