Opel managers will be presenting a business plan to the company's board on Wednesday that will likely include shutting down two facilities in the European region to slash manufacturing capacity by around 30 percent, according to insiders. The economic recession in Europe and the sluggish light automobile market have pushed GM to hasten its turnaround efforts in the region.
In 2011, GM lost $747 million in the European region. This is its 12th annual loss, bringing its cumulative losses in Europe to a total of $12.4 billion. According to one supervisory board member from the Labor side, GM has been reiterating that with excess capacity equal to 500,000 vehicles annually, they have "two plants too many."
The person, who requested anonymity, related that the new manufacturing boss has been visiting "one site after the other, playing them off against each other." The board member also said that the highlights of the business plan that may be shown on Wednesday include the possibility of plant closures and no company growth. He further disclosed that if the plan is put to a vote, the "entire Labor bloc" will vote against it.
A spokesman for GM declined to make a comment regarding closing plants, but reiterated the company's previous statement that executives are working closely with the unions and works council to boost profits. A person at the company revealed that a decision has yet to be made with regard to closing the plants in Europe, but further stated that management's room for compromise was increasingly limited by exceedingly harsh market conditions on the region.
The company source commented that business in Europe is "pretty dire for the industry overall at the moment and there's no end in sight." The insider added that when things get this bad, one has to take action. The person explained that it is not about what the company or the unions want, but the environment that is forcing them to take action.
As the eurozone crisis affects the region's car sales, the German carmaker is hoping to increase volume outside Europe. Nonetheless, GM is limiting Opel’s global expansion and regards Chevrolet and Buick as its primary brands in China.
According to German newspaper Handelsblatt, Opel may decide to partner with Chinese automaker SAIC to expand its sales in China. In fact, Opel has been in discussions with SAIC over a sales partnership to sell and distribute its cars in China. Such a partnership wouldn’t be too as GM already has a joint venture with SAIC in China. As per the report, Opel may expand its dealership network in China from 50 to between 200 and 300. [source: Autonews]