The management of European automaker Opel is determined to avoid massive job cuts as a response to sagging European auto sales. Opel will reportedly present a plan Thursday that focuses on model strategy via brand positioning and a renewed push in export markets, all the while avoiding what many experts believe are inevitable layoffs. By shrinking Opel’s fixed-cost base and running plants at maximum capacity, General Motors CEO Dan Akerson believes Opel employees can mostly be saved.
Mostly Bochum, Opel mostly endangered
Unfortunately, GM’s plan to preserve Opel in Germany will not come without casualty. Opel’s production facility at Bochum will no longer receive additional investment money from parent GM, as management has slated the plant to be closed down in 2017. GM also expects to move some Opel and Chevrolet production to Europe from Korea in order to meet production goals and appease workers.
Investors aren’t happy with the direction sales of Opel and U.K. sister brand Vauxhall have headed since the eurozone has plunged into economic chaos. Operating losses in excess of $3.5 billion over the past three years in Europe will only continue to grow in 2012, note industry insiders.
Opel negotiations are ongoing
Union negotiations involving restructuring may continue on until November, which means that Thursday’s Opel board meeting likely will not move the automaker’s stock price much.
“What we’ve said — I’ve said it and others have said it — is you’re going to see a continual series of actions over time,” GM Chief Financial Officer and Opel board member Dan Ammann told Reuters. “As we have something to say, we’ll say it.”
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Temporary labor to come for Opel
In order to keep costs low during the transition, the use of temporary workers at Opel is expected.
“Opel has made mistakes that others have not. It pays virtually everyone that has anything remotely to do with car production the same wages for auto industry workers, even if its logistics employees, security guards or those working in related supply services,” said an unnamed insider close to the Opel labor negotiations.
“Volkswagen, BMW, Daimler and others have long since abandoned this practice. While we don’t want to take anything away from those already earning these wages, we do need to start thinking about lowering wage costs for industrial services below that which an assembly line worker makes.”
Opel optimism unwarranted?
Opel would like to eliminate job loss in German through 2016, which means that 20,800 jobs would be saved. However, this promise comes with the stipulation that fresh wage concessions must be made by labor. Under Opel’s current business plan, which is good through 2014, 265 million euros per year are already marked as wage concessions on the part of labor, two-thirds of which would come from Opel’s staff in Germany. There are doubts as to whether organized labor will agree to additional cuts, simply to open up more funds to expand product range.
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