General Motors and the Adam Opel management board accelerate restructuring talks with the European unit’s German labor union today, laying out a plan that includes halting production at one assembly plant, delaying wage increases and perhaps building vehicles currently manufactured elsewhere.
GM in a statement says it will not commit additional product to its Bochum, Germany, facility after the Opel Zafira MPV’s cycle runs out in 2016. The auto maker cites the present economic environment and future demand for its decision on the 50-year-old plant.
Europe continues to grapple with the remnants of the global recession of four years ago, as countries burdened by sovereign debt teeter on the edge of bankruptcy and the potential for a breakup of the eurozone grows each day.
This state of affairs is undermining consumer confidence, causing record-low new-vehicle sales and frustrating GM’s decades-long attempt to trim overcapacity and high fixed costs in the region. Since emerging from its 2009 U.S. bankruptcy, the auto maker’s European operations have lost $3.8 billion.
GM says its plan for Opel focuses on reducing its dependency on importing vehicles, such as the South Korean-built Antara and Mokka SUVs, which is adversely affected by fluctuating exchange rates. Remaining European plants, such as Germany’s Russelsheim, Eisenach and Kaiserslauten, could go to 3-shift operations.
“We must work towards sustainable positive results for our operations in Germany,” Opel CEO Karl-Friedrich Stracke says in a statement accompanying an outline of the plan.
“Opel needs to adjust its business in a way that enables profitability even in difficult market conditions. With 2012 industry volumes expected to be down 20% from demand in the past five years, waiting longer to act would be irresponsible.”
Opel’s supervisory board will vote June 28 on the plan, which includes a pledge to the Opel and U.K. Vauxhall brands of 23 new models and 13 new powertrains. More vehicles will be environmentally friendly and occupy segments where the brands currently do not compete, GM says.
GM also hopes to more clearly define the Opel brand; reduce its research and development costs by better leveraging the parent’s global operations, including its new alliance with PSA Peugeot Citroen; and form an export strategy for Opel to Eastern Europe and Asia/Pacific countries such as China and Australia.
The plan would delay mandatory layoffs until 2016 and postpone raises for workers slated for this year.
Berthold Huber, chairman of Germany’s IG Metall labor union, calls GM’s plan “a beginning,” saying he wants to hear the opinion of workers at each of the Opel sites. The auto maker employs 20,800 people in Germany and more than 40,000 across Europe.
GM sought to unload Opel and Vauxhall shortly after its 2009 U.S. bankruptcy, but decided at the last minute to keep the unit and broadly restructure.
GM Chairman and CEO Dan Akerson said at the auto maker’s annual meeting in Detroit yesterday that repairing its European operation is a No.1 priority. “We have to fix Europe, or at least get it to where it isn’t draining the corporate coffers.”
