March 28, 2012 / 10:34 AM / in 6 years

German, UK car plants in balance as Opel board meets

FRANKFURT (Reuters) - The board of European carmaker Opel met on Wednesday under pressure from parent General Motors (GM.N) to put an end to years of steep losses, with thousands of workers in Germany and Britain fearing the closure of their plants.

Workers arrive for their change of shift at the Opel plant of Bochum in March 28, 2012. The board of European carmaker Opel met on Wednesday under pressure from U.S. parent General Motors to put an end to years of steep losses, with thousands of workers in Germany and Britain fearing the closure of their plants. REUTERS/Ina Fassbender

The 20-person board, which includes United Auto Workers boss Bob King for the first time, was scheduled to begin meeting at Opel’s headquarters in Ruesselsheim at around 0900 GMT and last into late afternoon.

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

One source close to the board said plant closures would be the elephant in the room even if they were not discussed.

GM Chief Executive Dan Akerson and Opel Chairman Steve Girsky are pushing Opel CEO Karl-Friedrich Stracke to lower the company’s breakeven point by shifting production from high-wage countries in western Europe to emerging markets.

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

“We’re not going to staauthorizedng with fear just because everyone is saying Bochum will be closed,” said one source close to Bochum’s labor leaders, who was not authorized to speak to the press.

“GM won’t announce any plant closure today, anyway, since they’d be crazy to give up 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 car sales in Europe, forcing makers to confront high fixed costs and a capacity overhang in the sector that GM’s Akerson says equates to up to 10 plants.

Opel’s own Antwerp plant, Fiat’s FIA.MI woefully uneconomical Sicilian plant, and the Trollhattan factory of insolvent carmaker Saab, were shut down in the past two years, and Mitsubishi is ending car production in its Netherlands facility by year-end.

But Europe still has around 240 plants in 27 countries and political resistance to plant closures has been strong. In the United States, Detroit’s big three automakers - GM, Ford (F.N) and Chrysler, now partnered with Fiat - closed 13 plants between 2008 and 2012.


For Opel graphic, click:

For a story on the factories at risk



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

“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,” the managing director of Braunschweig-based multibrand car retailer Duerkop told Reuters.

Quary nonetheless agreed that GM has 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 U.S. plants of German carmakers like Volkswagen (VOWG_p.DE) and Mercedes-Benz (DAIGn.DE). He has said organising U.S. 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 3,100 workers building the Zafira MPV, said closure would cost 45,000 jobs in total when related services companies and suppliers are included.

“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,” a statement from the plant’s works council said on Tuesday.

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

“We’ve been coming here since 1979,” he said. “Back in those days, Opel had 16,000 workers here. That shows the scale of the whole demise, and we’ve been watching it all happening.”

Ellesmere Port employs about 2,100 plus 700 contractors.

Auto analysts expect a wave of plant closures across the continent at other beleaguered carmakers, such as PSA Peugeot Citroen (PEUP.PA), Renault (RENA.PA) and Fiat.

Action taken by Opel could be of particular significance for workers at Peugeot, which has agreed to a cooperation deal with GM that is predicated upon each restructuring their 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 percent 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 programs 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.

Additional reporting by Tom Kaeckenhoff in Bochum, Ben Klayman in Detroit and Laurence Frost in Paris; Editing by Noah Barkin and Will Waterman

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