In a candid statement to senior managers at GM’s European subsidiary Opel, Chief Karl-Thomas Neumann revealed that the organization needs to step up its game in meeting goals. Neumann also admitted that the 2016 profit target outlined two years ago is not secure, possibly pointing to further struggles in Opel’s long and bumpy turnaround path.
According to the German newspaper Bild (via Reuters), Neumann’s remarks were made in a letter to 300 of its top managers. The letter warned them that “We see strong headwinds for 2015” followed by the announcement that “Profitability 2016” was not as secure of a plan as many had predicted. The statement could be a byproduct of current economic issues boiling in Europe, creating uncertainty for the near future.
While Opel has so far not commented on the validity of the report, the very mention of this alleged letter comes at a time when GM is in the midst of trying to make Opel into a profitable operation. A key factor in this turnaround is that Opel CEOs have come and gone in rapid succession in recent years, which has kept the division from establishing long-term direction. Establishing solid long-term leadership as well as finding a way to reverse nearly $18 billion in losses are two of GM’s key goals in its long term revitalization effort for Opel.
One part of the division’s recent misfortunes stem from a drop in demand from the Russian market, which is suffering from the effects of a weakening rouble. This may have forced Opel to shed jobs as well as slash production in its third-biggest market, according to the report from Bild.
“We are fighting everyday to reach that target. And we are seeing progress,” Neumann stated in an interview he conducted earlier this month. While the turmoil surrounding Opel has many layers, and it will be sometime before noticeable progress is made. Neumann’s confidence as well as his commitment to the turnaround plan does raise hope that Opel can right itself and emerge as one of Europe’s biggest and most profitable players once again.