Valmet Automotive, the Finnish manufacturer of Mercedes-Benz GLC models, is entering negotiations that could affect up to 1,075 workers at its Uusikaupunki facility, representing about 30% of the workforce.
As an independent manufacturer, Valmet makes its own employment decisions. Recently, the Finnish state acquired 79% ownership of the company after CATL, a Chinese battery maker, sold its stake in September 2025.
Market Context
European automotive production saw a significant decline through 2025, especially in luxury segments, primarily due to “reduced work volumes,” as noted by Valmet CEO Pasi Rannus.
The Uusikaupunki plant produces Mercedes GLC models for European distribution. Meanwhile, battery electric vehicles have captured a 15.8% market share year-to-date, according to ACEA data.
GLC Production Impact
The Uusikaupunki plant exclusively produces Mercedes-Benz GLC and GLC Coupe models for global distribution, having manufactured over 1.8 million vehicles since opening.
Upcoming production cuts are likely to affect delivery schedules for European dealers during the adjustment period.
Supply Chain Effects
Valmet sources components from suppliers in Finland, Sweden, and Germany for its manufacturing operations.
The company has strong ties with Nordic and European suppliers for automotive production. However, recent workforce reductions may affect the broader supplier network during the transition.
Car Market Response
The European automotive markets are currently undergoing fluctuations due to uncertainties in production and consumer market that’s evolved in recent years.
Ongoing transition to electric vehicles is significantly impacting market dynamics, particularly within the luxury segments.
Export Impact
Finland plays a notable role in the automotive export sector, which is a vital component of the nation’s industrial trade. The Port of Turku is crucial, managing significant quantities of Finnish vehicle exports to various European markets.
However, with a reduction in production, there will likely be a decrease in the volume of automotive exports from Finland during this transitional phase.
Local Workforce Impact
Uusikaupunki, with around 14,750 residents, faces economic challenges, primarily due to its dependence on Valmet, a major local employer. The town has historically relied on automotive manufacturing as a key economic driver.
Chief shop steward Satu Heijari told YLE she was “too shocked by the news of the possible redundancies to comment”.
Government Response
The Finnish government has acquired a 79% ownership stake in a strategic move to bolster its industrial policy.
Maija Strandberg, Director General of the Government Ownership Steering Department, noted that the company’s challenges were acknowledged during the acquisition, which also positions Valmet for potential expansion into defense manufacturing.
Economic Impact Analysis
The upcoming change negotiations will evaluate a range of adjustment measures, which may include temporary layoffs, job terminations, and role modifications.
Local businesses and service providers are bracing for decreased economic activity during this transition period. The challenges the automotive sector faces indicate wider adjustments occurring across European industries.
Local Business Effects
Uusikaupunki’s business community is preparing for decreased economic activity following workforce adjustments.
Local retailers and service providers depend on the automotive sector for customers, highlighting the need for diversification strategies to reduce reliance on this single industry.
Service Industry Impact
Uusikaupunki features a dynamic hospitality sector, including the Art House Pilvilinna, with its cafeteria and summer terrace, as well as various boutiques, antique shops, and restaurants.
The city center is home to a market square that hosts Saturday markets, which are influenced by local worker spending. Valmet, which employs over 1,300 people at its automotive plant, bolsters the local economy.
Supplier Network Effects
Finnish automotive component suppliers maintain relationships with Valmet for various manufacturing programs.
Reduced production volumes put adjustment pressures on the Nordic automotive supplier network. Industry associations monitor impacts across the regional automotive ecosystem.
Mercedes Production Strategy
Mercedes-Benz must adjust its European production planning following Valmet’s capacity reduction.
The company operates multiple production facilities across Europe for GLC models. Alternative production arrangements may be necessary to maintain the European market supply.
Community Support Systems
Local healthcare and social services prepare for increased demand during the economic transition.
Community organizations focus on supporting affected workers and families through the adjustment process, and municipal authorities coordinate resources for workforce transition assistance.
Skills and Retraining
The affected workforce possesses specialized automotive manufacturing skills developed through years of contract manufacturing experience.
Finnish employment services coordinate retraining programs for transitioning workers. Skills transfer opportunities exist across multiple manufacturing sectors.
Financial Market Response
European automotive markets reflect broader industry adjustment pressures throughout 2025.
Valmet’s challenges align with sector-wide transitions toward electric vehicle production and changing consumer preferences. Industry analysts monitor contract manufacturing viability amid market shifts.
Consumer Market Dynamics
European luxury vehicle markets experience fluctuating demand patterns amid economic uncertainty and sustainability transitions.
Mercedes GLC models compete in evolving SUV segments with increasing electric vehicle alternatives.
Political and Policy Context
Finnish industrial policy emphasizes maintaining specialized manufacturing expertise within the country.
Government ownership enables strategic decision-making for long-term competitiveness. Defense sector opportunities align with Finland’s NATO membership and security priorities.
Electric Vehicle Transition
With the shifting demand for electric vehicles, Valmet shifts production capabilities to EVs for future contract manufacturing opportunities.
The company competes with lower-cost Eastern European facilities for new automotive contracts. The transition to electric vehicles requires significant capital investment and technical expertise development.
Future Outlook
The September 2025 announcement by Finnish state-owned Valmet Automotive represents a significant workforce adjustment at the Uusikaupunki facility. The decision stems from declining European luxury vehicle demand and automotive industry transitions.
Recovery prospects depend on securing new contracts across the automotive and defense sectors while maintaining specialized contract manufacturing expertise. The company aims to leverage government ownership for strategic positioning in evolving industrial markets.