Aug 02, 2016

    Daimler bypasses tariffs, unions with new US factory


    GERMAN carmaker Daimler broke ground last week on a US$500 million (S$670 million) plant in Charleston, South Carolina to build vans, with the company hoping at last to avoid steep United States import tariffs.

    When the factory comes online by the end of the decade, it may also help it pay lower wages and circumvent labour unions.

    Avoiding the 25 per cent tariff that the US puts on imports of commercial vehicles was also crucial.

    The Mercedes-brand Sprinter vans are currently built in Germany and shipped to the US for reassembly.

    South Carolina wages are markedly lower than those in Germany and the governor, Nikki Haley, opposes organised labour.

    "We discourage any companies that have unions from wanting to come to South Carolina because we don't want to taint the water," she told The Greenville News, a local newspaper.

    Assembly line workers get US$18 an hour in South Carolina, according to Labour Department figures. Hourly wages for German car workers are closer to US$37 an hour.

    Frank Klein, director of operations at Mercedes-Benz Vans, said the company's practice was to pay a "competitive" wage wherever it builds a plant.

    The Charleston facility should be operational around 2020, following the introduction of the next Sprinter model, with some versions capable of running on electricity or featuring driverless navigation.

    Daimler is not the only carmaker to set up operations in the southern US.

    Volkswagen, Nissan and Honda also maintain car plants, which the United Automobile Workers union has yet to bring into its fold.