GM’s European arm Opel is planning to reach a deal with the German labor union IG Metall by October 26th, the union said Friday. The new plan is part of a comprehensive turnaround plan for loss-making Opel.
In addition, the deal must take into account “commitments for the long-term future” of Opel’s plants and not contain compulsory layoffs beyond 2016, said the statement signed by IG Metall’s Bochum-based local representative, Ulrike Kleinebrahm, as well as the head of the Bochum plant’s works’ council, Rainer Einenkel. The section is likely in specific reference to comments made by Opel’s management in June about the possibility of phasing out production at Bochum after 2016.
General Motors is under escalating pressure to curb losses at Opel and has reorganized management roles while researching the viability of different plans, including replacing the Opel brand entirely in certain European markets as well as spinning the unit off. However, the scope of control by Opel leaders may be limited thanks to shrinking demand for new cars in Europe. In fact, Opel isn’t the only mass-market automaker operating in the red in Europe, as most competitors face similar price pressures and overcapacity problems. What does make Opel’s predicament unique, however, is that it lacks scale of Volkswagen, for example, since the GM subsidiary has no presence outside of Europe. That said, Opel began selling cars in Australia and Chile in September — marking the brand’s first true international expansion.
The GM Authority Take
It’s no secret that Opel’s losses stem first and foremost from overcapacity issues. As such, it will be interesting to see how the new union contract plays out since the only way to stem Opel’s hefty losses is to shutter a plant or two (or three)… or to increase their productivity, which GM likely hopes will occur as a result of its alliance with PSA Peugeot Citroen.
After months of playing the waiting game, it seems that things are about to get very, very interesting for Opel.