Daimler should rethink expanding U.S. output if euro stays weak, labor chief says

STUTTGART (Reuters) -- Daimler's plans to expand production in the United States should be recalibrated if the euro remains weak against the dollar, the automaker's top labor chief, Michael Brecht, said.

In October last year, Daimler announced it will shift some production of its Mercedes-Benz Sprinter vans from its factory in Duesseldorf, Germany, to a new plant somewhere in the United States, Mexico or Canada.

But the weakening of the euro relative to the dollar in recent months has made factories in Europe more competitive, compared to a year ago, when strategic decisions were made on the basis of a dollar euro exchange rate of $1.35, Brecht said.

Today the dollar euro exchange rate is around $1.13.

"If the situation stays like this over a longer period, then the question is: Do I go in now, or can I do it later," Brecht said at a roundtable discussion in Stuttgart, in remarks that were embargoed for today.

Currently most Sprinters for the U.S. market have been produced in kit form at plants in Duesseldorf and Ludwigsfelde, and then shipped to be reassembled in Charleston, S.C.

The United States is now the Sprinter's second-largest sales market after Germany.

Brecht said some projects that have been agreed upon but not yet fully implemented may be amended. He declined to elaborate on which projects he had in mind.

Daimler announced expansion steps last year. It said it would build a factory in Aguascalientes, Mexico, and would produce four-cylinder engines for Mercedes at a Nissan plant in Tennessee.

In June, Daimler started producing the C class at its plant in Tuscaloosa, Ala.

In Germany, Daimler is working to increase production efficiency at its plants by 2 to 3 percent every year, Brecht said.