NEW YORK - Citing cost overruns, Mercedes-Benz of North America Inc. last week abruptly pulled the plug on a scheduled move to a new greenfield headquarters complex.
'Clearly, our (cost) estimates were too low,' admitted Michael Bassermann, chairman of the U.S. sales and marketing company.
'Better to stop it now than when we had already started to build,' he said in an interview.
Mercedes budgeted $50 million last October to build a new headquarters on a 91-acre site in Or-angetown, N.Y. With some fanfare, Mercedes then announced in December that the Munich-based architectural firm of Lauber + Woehr had won a design competition for the new building.
It would feature a 'space frame' design with 30-foot-high skylights, and a huge three-pointed star on top.
Bassermann said preparing the new site for construction turned out to be much more difficult and expensive than previously thought. 'And, yes, I suppose we added some things (features) too,' he said.
The new location is across the New York state line from the Mercedes headquarters in Montvale, N.J., although the two sites are only a few miles apart.
By moving to New York, Mercedes would have won state incentives worth up to $9.5 million, mostly in outright grants. The amount depended on how many new jobs were created, on top of the present work force of around 750.
All that is now up in the air.
Mike Jackson, company president, said it will take 60 to 90 days for Mercedes to decide what to do next.
But he insisted there is nothing more to the announcement than what is being said: that the company had a hard and fast budget of $50 million, and the costs were running way above the budget.
'Just because we're having a great year, the best year in our history,' he said, 'doesn't mean I still don't intend to pinch every penny.'
He also said that Mercedes has dropped its earlier pledge that it would confine the headquarters search to no more than a 10-mile radius from the old headquarters, a constraint that was intended to minimize disruption to employees.
'One option is, we could move to an area where the cost base is completely different. Every possibility is open,' Jackson said.
Bassermann and Jackson both warned against jumping to the conclusion that Mercedes might now decide to locate headquarters near the Alabama assembly plant.
'There's no reason for us to be near the factory,' Bassermann said. 'And New York is the marketing and advertising capital.'