FRANKFURT -- Talks adjourned between DaimlerChrysler's luxury unit Mercedes and employee representatives after more than nine hours, a union official said on Tuesday, as both sides stuck to their guns in wrangling over cost cuts.
The talks will resume on Wednesday afternoon.
"It's very difficult. It's getting stuck on a couple of critical issues," a union source familiar with the talks said, adding that management did not want to budge from its demand for labour cost savings of 500 million euros ($619 million) a year.
Over 60,000 Mercedes workers downed tools last Thursday in a nationwide protest over the company's plans for fewer paid breaks and other benefit cutbacks at its plants in the wealthy southwestern state of Baden-Wuerttemberg.
The company's works council, which represents employee interests, said the talks resumed late this morning at the group's headquarters in Stuttgart.
"There are still controversial issues where there's a big difference of opinion," a works council spokeswoman said earlier.
The Mercedes Car Group, the largest contributor to operating profits at DaimlerChrysler, wants to reduce labour costs in Germany by asking employees at its largest plant in Sindelfingen essentially to work longer hours without compensation.
The attempt has touched a raw nerve among German manufacturing employees, who have seen thousands of jobs move to lower-wage areas in recent years.
German car parts firm Robert Bosch won agreement from workers at a plant near Lyon to work 36 hours instead of 35 without extra pay, making them the first employees to vote to scrap France's 35-hour week.
DaimlerChrysler's works council plans to hold more demonstrations at Daimler plants throughout Germany this Friday if no resolution is reached by Thursday.
In an interview with German television on Monday night, Mercedes chief Juergen Hubbert said he thought an agreement would be possible when talks resumed on Tuesday.
The talks included works council head Erich Klemm, Daimler's personnel director Guenter Fleig and regional IG Metall union boss Joerg Hofmann.
Hubbert has threatened to cut 6,000 jobs at Sindelfingen and shift production of the new version of the Mercedes C-class mid-sized saloon, due to be launched in 2007, to more efficient factories in Bremen and South Africa.
He angered employees by branding as a "disease" the wage agreements valid in Daimler's home state of Baden-Wuerttemberg, which grant paid pauses for every hour worked and a 20-30 percent late-shift bonus for workers starting as early as midday.
Over the weekend, DaimlerChrysler's management board appeared to offer an olive branch by suggesting it would be ready to take a pay cut if a cost-cutting deal were struck.
A company spokesman declined to comment on reports that the pay cut could amount to 10 percent and include lower tiers of management.