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Opel Reduces Working Hours At German Facilities Following Brexit

Despite reports to the contrary, Britain’s exit from the European Union — or Brexit — continues to affect operations across the world. The latest example is the decision by GM subsidiary, Opel, to cut back hours at its German manufacturing plants as a result of Brexit.

According to Reuters, lower demand for the Corsa and Insignia were major contributors to the decision, likely stemming from a less enthused consumer base to purchase new vehicles.

“We can confirm that there will be short-time work in the plants in Ruesselsheim and Eisenach during the course of this year,” Opel said in a statement, adding that the number of days when shorter working hours apply will depend on the sales volume of the Insignia and the Corsa in the United Kingdom.”

“The Brexit situation is an issue for everybody who does business in and with the UK at the moment and we already announced last month that there will be an impact on our European financial performance if the value of the pound remains at its current level for the rest of the year,” Opel stated.

The impact of Brexit will continue to unfold as analysts fear it could lead to the closure of Vauxhall’s Ellesmere Port manufacturing facility.

Former GM Authority staff writer.

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Comments

  1. Remember when all those “smart people” said Britain would never vote to leave the E.U. and all those polls showed they were “right”? And how did that turn out?

    Another revolution is underway in America this year. Ignore the polls, bias media and nutjob pundits…Think and vote for yourself. Real change is needed or we wont have a country anymore.

    Reply
    1. And if you’re wrong as those ‘smart people’ in Britain were?

      Never hang things on certainty. Only math is absolute.

      Reply
  2. Remember when all those talking heads predicted the end of the world if Britain voted to leave the E.U.? Yup, okay…

    Quit the scare-mongering…and stop being a sore loser. The majority voted and they disagree with you.

    Reply
  3. GM has gotten itself something of a problem in its fourth largest, global market and it’s single largest European market. But it’s little to do with Brexit. And a lot to do with poor decision making and planning.

    Since the ‘60s, GM operated 3 major plants in the UK. A car plant at Luton, a van plant at Luton and a car plant at Ellesmere Port. At the start of the noughties, the expectation was that Ellesmere Port would focus upon Astra and Frontera; Luton car upon Vectra and Corsa, with Luton van focused upon Vivaro – consistent with the philosophy of ‘build ‘em, where you sell ‘em’.

    At the same time, it was painfully clear that GM had 2 too many plants in Western Europe. And 2 of them were in Germany. But given GM didn’t have the stomach for a fight with the German trade unions, they closed the Luton car plant with the Belgian plant in Antwerp meeting a similar fate several years down the line.

    Expected Corsa production was taken up by Eisenach and Zaragosa, with Vectra (Insignia) production ultimately consolidated at Russelheim after a brief stint at Ellesmere Port. As the noughties drew to a close, this left Astra production at the ‘Port and Vivaro production at Luton. At the same time, British content in GM models produced across Europe also reduced and the production of engines at the ‘Port was also discontinued.

    Now offering car production at Luton as a sop to German Trade Unions might have seemed like a shrewd move just over a decade ago. But now it’s come back to bite GM in the backside.

    The UK is GM’s fourth largest market, yet the company only produces a small proportion of the cars it sells in the UK within the UK. So since the Brexit vote, those EU produced Corsas, Insignias, Adams, Mokkas, GTCs, Zafiras, Movanos and Merivas sold in the UK, have gotten a lot more expensive and a lot less profitable. Worse, because the majority of components in UK produced Vivaros and Astras are imported… there’s little upside for GM with existing UK production arrangements.

    Vauxhall’s relegation to an Opel Group subsidiary has served neither GM nor Vauxhall well, with product planning poorly executed and opportunities missed. Zafira Tourer is a case in point… it’s too big to fill the shoes of the model it replaced. The absence of capable and competitive mid-size and large SUVs is another case in point. Look at the success of the UK produced Qashqai and then ask the question, where is the GM / Vauxhall equivalent? Even Vauxhall / Opel’s highly capable Mokka has its origins in GM Korea and not Opel. And there’s still the issue of vehicle handling, which relegates some otherwise excellent Opel produced Vauxhall models – I’m looking at you, Astra – as also-rans among keen drivers, given the decision to use Europe wide ride and handling settings rather than UK tuned values. And then look at the British subsidiary of the world’s largest manufacturer of pick-up trucks and ask ‘Where are they on UK roads?’. And pinch yourself, when you realise the answer is ‘nowhere to be seen’. Heck, even that most European of manufacturers Volkswagen is importing its own.

    If GM is serious about returning its European operations to profitability – and let’s face it, Opel’s probably had more ‘comebacks’ than Elvis – then it needs to take its own advice and build the product where it sells it. That means increasing UK production and increasing UK content, to better balance and manage exchange rate risk. Failure to do so just won’t impact Vauxhall, but will impact Opel to an even greater degree and GM in general. And it also means developing a post Brexit strategy for Vauxhall too.

    It’s perhaps somewhat ominous that the first GM casulaties of Brexit are not British, but German workers.

    Reply
    1. I agree wholeheartedly with your assessment of GME John, and can see an opportunity to re balance the supply chain in favour of GM’s UK Operations within the growing market for EV’s. If GM need to make additional capital investment to serve a future European EV market, then it would seem natural to make that investment in the UK and develop a supply chain in tandem that avoided undermining existing drive train manufacturing expenditure.

      Reply
  4. Agree Joycopter 🙂

    Of course the only fly in the ointment is that Opel may have just have goofed their EV strategy, with the upcoming launch of the Chevrolet Bolt based Ampera E at a time when the market is moving away from MPVs. Furthermore, I’m not even sure that the Bolt’s architecture can support RHD variants.

    I cannot understand why there isn’t and by all accounts won’t be an EV Astra. It’s been clear for several years that EVs are becoming increasingly mainstream and during the life of the current Astra, the EV option will become just another powertrain option on the list alongside petrol and diesel. There was an opportunity to pioneer the market as Hyundai are doing with the Ioniq by going one stage further and offering full electric, plug-in hybrid, PHEV, diesel and petrol options within a single range. Given it shares a similar floorpan (D2XX/UX) to the Chevrolet Volt, the Astra would have been the perfect range to roll out such a strategy with. But again it’s an opportunity missed 🙁

    I can’t for the life of me understand how Opel Group can become so obsessed with micro-niche products such as the Opel / Vauxhall GT – and execute them so well – yet Russelheim still fails to capitalise upon blindingly obvious market opportunities such as an electric and hybrid Astras.

    Reply
  5. When you look at the actual sales figures, the Spiegel report reated by Reuters appears to be totally false.

    According to what I read on the “bestsellingcarsblog.com” in
    “UK July 2016: Vauxhall Astra and Mercedes A-Class shoot up”

    >> The UK new car market has now well and truly plateaued: after dropping 0.8% in June, it is up just 0.1% year-on-year in July to 178.523. The Year-to-date tally is still evolving at record heights though at +3% and 1.599.159. If all and all this is not such a bad result in a July European environment where both Germany and France dipped<<

    and

    GM’s Vauxhall had fared quite well

    >> Model-wise, the Ford Fiesta remains on top despite deliveries down 6% to 7.990 ahead of the Vauxhall Corsa up a solid 15% to 5.606. The Vauxhall Astra finally takes advantage of the new generation with sales up a stunning 55% to 4.939, earning the nameplate its first podium ranking since February 2014. The Astra takes the lead of its segment this month, with the Ford Focus down 30% to #4 and the VW Golf down 7% to #6. <<

    and the brand as such also:

    >> In the brands ranking, Ford keeps the lead in spite of sales 8% to 22.247 but Vauxhall is catching up at +17% and 19.733 units, potentially helped by the brand’s traditional strength in the fleet market. <<

    Mind you:
    • of the 1.6 million vehicles produced last year (2015) on the island, 80% were exported, and the majority of this went to the European continent, followed by the USA.
    • only 8.1% of all newly registered cars in UKoGBaNI were produced in the country;
    • 810,000 cars had been imported in 2015.

    And ioverall in the British automobile industry, in average only one third of the components come from the island itself, two thirds are being imported. Before jumping to conclusions when comparing 33% with the 25% for GM/Vauxhall-Opel, consider that most of the car factories on Great Britain are just a part of an all-European production network, and only two of the manufacturers with a significant mass production (Jaguar-Landrover with 500,000 and BMW (Mini, Rolls Royce) with 200,000 per year have factories only on the island. BTW, Nissan also produced around 500,000 units last year.

    The British automotive industry recovered in the past decades only as a production site for the overall European market. Without UKoGBaNI being part of the common Internal Market of the EU, neither Nissan nor Toyota would have invested on the island, Ford and GM would have reduced their British operation much more, and BMW would have looked for a second assembly site for their Mini production right from the beginning. BTW, the whole British automobile industry is foreign owned, with the exception of some small nice producers.

    In conclusion, while Opel has confirmed the plan to have “Kurzarbeit” (shorter work week subsidised by unemployment benefits) for Rüsselsheim and Eisenach, they did neither confirm the numbers nor Der Spiegel’s speculation that this a consequence of sinking sales numbers due to Brexit. I think that was invented to create a wrong impression, to manage emotions.

    Reply

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