RESTRUCTURING: G.M. Board Approves a Plan for Europe
Friday, June 29th, 2012
At least one plant closure, job cuts, delayed pay raises, and broader sales distribution are the key factors described in a plan submitted by a General Motors supervisory board charged to find a way to make Adam Opel profitable in Europe. It seems that we've heard most of it before - on more than one occasion - and still G.M. lost $747 million last year.
Nevertheless, G.M. v-p and Opel Supervisory Board Chairman Steve Girsky believes his plan will work. "The plan we approved today paves the way for Opel's strong future," Mr. Girsky said in a statement.
The key to making all of this happen, of course, is union cooperation, something G.M. hasn't enjoyed in the past and not likely to receive in the future. G.M. recently said it would keep the Bochum, Germany, assembly plant operating until the end of 2016, at which time operations there would be suspended. More than 3,000 people work at Bochum and while the unions may allow G.M. to shutter the plant, G.M. will pay dearly for all of those lost jobs with no sympathy from the German government.
G.M. will likely want to adjust work force levels at its other German assembly plants at Eisenach, Russelsheim and Kaiserslautern.
Opel is said to be in negotiations with German unions to delay a 4.3% wage increase for metal industry workers and it is being pressured to extend an agreement that would prevent Opel from firing or laying off workers or closing any plants until end 2016. That would seem to mean that G.M. is looking at five more years of losses in Europe, something the company can ill afford to do.
G.M. is also said to be looking at exporting Opel cars to China but the Chinese government has already made it clear that it does not favor imports and will slap tariffs on imported vehicles that often make them uncompetitive in the Chinese market.
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