The German government, facing a taxpayer revolt and deficits that foreshadowed the current debt crisis in Europe, refused to provide €1.1 billion in subsidies that previous GM management wanted for Opel. Those managers have since been fired or retired in what has become a revolving door of ineffectual executives.
Today, IG Metall union members of Adam Opel AG in Bochum voted more than 3:1 against a revised labor agreement that would have offered their location some long-term jobs while cutting others. Since Opel management at the loss making GM subsidiary previously said that no further negotiations on the proposed labor agreement would take place, the production of the Zafira Tourer and the exclusion of compulsory separations will run out by the end of 2014. The plant is doomed.
The negative vote at one of GM’s German locations follows recent affirmative votes at three other locations that endorsed the company’s “Deutschlandplan” or Germany-wide plan to trim costs and keep four Opel plants open, as well as barring compulsory separations to the end of 2016.
GM has lost more than $18 billion in Europe since 1999, including $1.8 billion in 2012. GM also wrote down more than $5 billion in assets in the Eurozone, and it wrote off more than half the value of its PSA Citroen stock (-$220 million) acquired latest year in what GM said was a collaboration that would, eventually, save billions. Successive GM restructuring plans have failed to stop the oceans of red ink. GM has repeatedly promised to break even in Europe by mid-decade, a prospect that appears laughable given the ongoing EU crisis.
“We very much regret that the employees in Bochum did not accept an attractive offer,” says Manfred Gellrich, Director of the Opel plant in Bochum. “A huge opportunity has now been missed.”
Acceptance of Opel’s offer would have meant the conversion of the Bochum location to a components plant and the expansion of the warehouse center. Wages would be frozen and some fringe benefits trimmed. This would have secured at least 1,200 Opel jobs in Bochum in the long-term. However, 1,800 or more jobs would have been eliminated.
Not affected by today’s decision is the development agency “Bochum Perspektive 2022,” whereby Opel is making both financial and personnel investments. The goal of this initiative is to settle new companies and technologies in Bochum and the region. Automaking and other manufacturing jobs in Europe have been moving out of the Northwest, where Bochum is located in the Saar region, to eastern European countries, as well as Asia.
Where this leaves the other German locations and GM’s latest business plan was not immediately clear. However, it appears likely that Opel will continue producing two models after 2015 in Eisenach at the manufacturing site of the small Corsa and the Adam. The components plant in Kaiserslautern is also secured beyond 2016 with around 1,800 employees. At Rüsselsheim, Opel will produce a second model in its main plant, also after 2015. The next generation of the flagship Insignia will also be exclusively built in Rüsselsheim. In addition, production of the F40 gearbox remains exclusively in Rüsselsheim.
