GM puts costs pressure on Opel

2012-03-29 09:10

FRANKFURT, Germany - The board of European automaker Opel has met, under pressure from US parent General Motors, to put an end to years of steep losses with thousands of workers in Germany and Britain fearing plant closures.

The 20-person board, which for the first time includes United Auto Workers' leader Bob King, was scheduled to begin meeting at Opel's headquarters in Ruesselsheim.

Company sources said it was not clear whether management would go ahead with submitting a mid-term business plan that included plant closures, or focus on less-sensitive issues such as the appointment of a new sales chief.


GM chief executive Dan Akerson and Opel chairman Steve Girsky are pushing Opel CEO Karl-Friedrich Stracke to lower the company's break-even point by shifting production from high-wage countries in western Europe to emerging markets.

Though Opel has said no plants will close before the end of 2014, most expect the 50-year-old factory at Bochum in western Germany will be shuttered, along with one at Ellesmere Port, the company's only remaining car plant in the UK, where the brand is known as Vauxhall.

A source close to Bochum's labour leaders said: "We're not going to start trembling with fear just because everybody is saying Bochum will be closed. GM won't announce any plant closure today, anyway, since they'd be crazy to play their trump card. The moment they say which plants are safe, they can no longer play them off against each other in the hopes of extracting concessions."

Economic weakness has hit vehicle sales in Europe, forcing makers to confront high fixed costs and a capacity overhang in the sector that GM's Akerson says equates to as many as 10 plants. Opel's own Antwerp plant, Fiat's woefully uneconomical Sicilian plant, and the Trollhattan factory of insolvent Saab, were shut down in the past two years and Mitsubishi will cease car production in its Netherlands facility by 2012 year-end.

Europe still has around 240 plants in 27 countries and political resistance to plant closures has been strong. In the US, Detroit's top automakers GM, Ford and Chrysler (now partnered with Fiat) closed 13 plants between 2008 and 2012.


Opel dealers such as Stefan Quary said the time he spends trying to assuage the fears of, in particular, fleet customers showed the uncertainty was harmful for business and needed to be addressed quickly.

Quary said: "When you approach a customer with a leasing deal where we offer to take the vehicle back after three years and replace it with a new one, they ask whether Opel will still be around by then, since they fear being stuck with depreciating assets on the books."

Quary nonetheless agreed that GM had little choice but to better align its production base with its market share.

Opel's European labour hopes to benefit from having the UAW's King on the board, since he enjoys strong ties to chairman Steve Girsky and has praised Germany's tradition of labour management in the past.

King, for his part, is trying to marshal German trade union IG Metall to support the UAW in gaining traction among the US plants of German automakers such as Volkswagen and Mercedes-Benz. He has said organising US plants run by foreign automakers, known in the industry as transplants, is crucial for his union's survival.

The stakes are high for Opel workers in Germany and the UK. The works council in Bochum, where the Opel plant employs about 3100 people building the Zafira MPV, said closure would cost 45 000 jobs in total when related service companies and suppliers were included.

A statement from the plant's works council said: "Opel Bochum's employees are rightly asking themselves 'What happens after 2014?' Plant closures have not been taken off the negotiating table, just the opposite."

Detlef Holzhauer, a 61-year old teacher from a school in Bochum who visited the plant with his class, said he had witnessed a steady erosion of jobs over decades.


Holzhauer said: "We've been coming here since 1979. Back in those days, Opel had 16000 workers here. That shows the scale of the whole demise, and we've been watching it all happening."

Ellesmere Port employs about 2100 plus 700 contractors.

Auto analysts expect a wave of plant closures across the Continent at other beleaguered carmakers such as PSA Peugeot Citroen, Renault and Fiat.

Action taken by Opel could be of particular significance for workers at Peugeot, which has agreed to a co-operation deal with GM predicated on each restructuring its European operations and sharing platforms to cut costs.

Analysts estimate that Peugeot has an even greater need to close down factories than Opel, in part because GM already reduced its fixed costs by 20% during 2010 and 2011 with the closure of the Antwerp plant and downsizing elsewhere.

The French automaker will overhaul its European capacity within "18 months to two years", manufacturing chief Denis Martin said earlier in March, but no announcements are expected until after France's presidential election ends on May 6.

Peugeot unions fear that small car plants in Madrid and Aulnay, north of Paris, are most at risk as the Paris-based company prepares joint vehicle programmes with GM including subcompacts and larger cars.

Separately, the Opel board approved Alfred Rieck as new sales chief starting in July, replacing Alain Visser, who accepted a new position in Chevrolet's global marketing department. Former Vauxhall chief Bill Parfitt is expected to serve as head of sales in the interim.


  • zubair.loonat - 2012-03-29 11:34

    Is the Opel brand still alive?

      Erik - 2012-03-29 13:12

      Yes...you might have heard of the Corsa OPC,the new GTC they just launched and Mariva.Also known as Vauxhall in the UK and Holdens in Australia.

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