General Motors Co. said that in its attempt to put a stop to Opel’s losses in Europe, it may close down the plants and cut jobs. This statement has upset Opel's top union leader Klaus Franz who said that GM's current labor deal in Europe doesn’t allow for plant closures and job cuts through to 2014.
When Chief Financial Officer Dan Ammann unveiled GM's third-quarter results on Wednesday, he said that when it comes to restructuring GM's European operations, nothing was "off the table" and this may include shutting down its plants. According to Opel's chief Karl-Friedrich Stracke, Opel's European restructuring has been successfully completed.
Franz said during a Reuters interview that GM's board of directors has agreed to a contract that prohibits job cuts and factory closures until December 21, 2014. Last Wednesday, GM said that its losses in Europe have fallen from $559 million to $292 million in the third quarter of 2010. GM had anticipated that it will break even in Europe this year before restructuring costs.
The company achieved this level through the first nine months but the declining economic conditions has prompted the company earlier this week to back away from its full-year breakeven goal. Amman informed analysts that GM assumes that the market “won’t improve materially from where we are." He said that this suggests that there’s a need to lower the break-even point even further.