Opel CEO Anticipates Few Parts-Supply Problems; Expects Profits

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SAE World Congress

DETROIT – Adam Opel CEO Karl Stracke, who took the helm of German auto maker last month after 32 years in engineering and leadership positions with parent General Motors, foresees no near-term production disruptions for the unit due to parts shortages.

“Right now, I am covered for production.” Stracke tells Ward’s on the sidelines of the annual Society of Automotive Engineers World Congress, which he chairs this year. “For the next foreseeable weeks, I’m covered.”

In the U.S., GM has idled one pickup assembly plant in Shreveport, LA, and cut overtime at an SUV-making facility in Arlington, TX, most likely due to a shortage of parts sourced from a devastated Japanese supply network.

GM generally does not comment on its motivation behind changes in its production schedule.

Japanese auto makers are starting to get their home operations back running after focusing on the damage from the March 11 earthquake and tsunami. Toyota, Nissan and Honda also have slowed production at U.S. sites due to parts shortages, while OEMs operating in Europe have reported supply problems, as well.

Sources tell Ward’s supplies of parts and components with high electronics content remain most affected and less so on the mechanical end. Key electronics suppliers are located in regions of Japan most affected by the disaster.

Stracke reports Opel’s assembly plants are running at planned speeds. “We are not slowing down. There is no reduction in scheduling from the Japanese crisis so far.”

Stracke cites close communication with Opel’s supply base for avoiding any slowdown so far. “They are helping us, giving us an excellent overview of the business. We have a good understanding right now.”

“We see the future. There will be a mixture of propulsion systems,

He also reiterates Opel’s intention to regain profitability this year after a major restructuring for itself and its U.K. sister brand, Vauxhall.

“Our footprint and structured costs are significantly improved in the company right now,” Stracke says. “We are optimizing the pricing in the marketplace, as well. In this context, breakeven has already been achieved and we are about to make money this year.”

Stracke’s remarks come after software-executive-turned-venture-capitalist Ray Lane addresses the convention, offering some harsh words for an industry he considers investment-worthy.

Lane chides the design of current U.S automobiles: “They all look alike to me. I can’t tell which car is which.”

The managing partner at California-based Kleiner, Perkins, Caufield & Byers also says auto makers selling in the U.S. have too many dealers and offer too many trim levels. “Heated mirrors? Heated seats? Those are not the priorities of the industry.”

The industry spends too much effort resisting stricter fuel-economy regulations, Lane adds. “The goal should be to use less oil and emit less carbon.”

An investor in Fisker Motors, he points to the Karma sports sedan as the type of expressive, no-compromise, high-mileage car the industry should be building. But Lane also urges auto makers to pursue a portfolio of options, including biofuels.

Stracke finds little to disagree with in Lane’s remarks. “We need to go away from the fossil fuels, less dependency on oil,” he says. “The only strategy is to invest in electrification. We see the future. There will be a mixture of propulsion systems.”

But Stracke also believes segments will further fragment in the future. “One thing is for sure. We need to address customer needs in every segment, and that also means more trim levels down the road,” he says. “If a customer wants to buy a yellow car with a gray interior, we better have it.”

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