Opel outlines plan to revamp German plants

AP News
Posted: Jun 13, 2012 2:07 PM
Opel outlines plan to revamp German plants

General Motors' lossmaking Opel subsidiary has outlined a plan that foresees an eventual end to production at its plant in Bochum, Germany, softened by the extension of a no-layoff guarantee for all its German workers for two more years through 2016.

Opel said in a statement Wednesday that it was in "active talks" with employee representatives and unions about new proposals to make more efficient use of its four German factories and turning around the lagging European business.

Those included putting off a scheduled pay increase for workers in Germany and possibly building non-Opel models in Germany to keep plants running 24 hours a day.

In return, the company would extend a no-layoff pledge through the end of 2016 instead of through 2014 as under current bargaining agreements.

Opel said its Bochum plant would not get further production allotted to it after the end of the life cycle of the Zafira Tourer now made there. The company did not say when Zafira production might end. But the plant was already widely expected to face closure when the current labor agreement expires, and the new no-layoff pledge appears to extend its life for another two years.

Bochum is an older, higher-cost facility that has figured prominently in speculation that Germany will close one of its four plants in the country and Tuesday's announcement appeared to underline GM's determination to eventually close the facility. Factory closings are expensive and politically difficult in Germany, where severance costs can be high, worker representatives sit on company boards and unions have political clout.

GM has made clear it is determined to return to profitability its money-losing European business, which includes Opel and the Vauxhall brand in Britain, despite tough competition among mass-market carmakers.

"We must work towards sustainable positive results for our operations in Germany," Adam Opel GmbH CEO Karl-Friedrich Stracke said in a statement. "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 percent from demand in the past five years, waiting longer to act would be irresponsible."

Opel said it was still in talks with the IG Metall union and employee representatives on the proposals and that further negotiations would be needed. Opel's chief employee representative, Wolfgang Schaefer-Klug, praised the deal outlined Wednesday, saying "the main points of the proposed business plan go in the right direction." He said the no-layoff pledge was a condition for continuing the talks.

One key concession from the unions would be to agree to delay a 4.3 percent pay increase won this year in industry-wide negotiations. In Germany, base industrial wage agreements are negotiated between company associations and the IG Metall union representatives for regions, not company by company.

Opel has also said it plans a new export strategy to sell more cars in emerging markets such as Russia, Turkey and China, and enter new markets such as Australia.

Wednesday's statement said the company planned "significant investments" in new products between 2012 and 2016, including 23 new models, three new engine families and more vehicles with alternative propulsion such as the electric Ampera. It plans models in segments where it is not present, such as the Mokka small SUV, compact Adam and a new convertible.