General Motors doesn’t believe that Europe's auto market will quickly recover and so it has announced that as soon as the current version of the Zafira minivan is replaced, Opel's Bochum plant in Germany will shut down in 2016. Opel said that it wants to develop the site's component and distribution operations to lessen job losses.
This plan is one of Opel’s strategies to finally post a profit by mid-decade. Last June, Opel said that it won’t produce the Zafira successor at Bochum. In a statement last Monday, Opel said that even with painstaking efforts, the situation hasn’t changed. It pointed out that the primary reasons are the significant weakening of the European car market and the vast overcapacity in the entire European auto industry.
According to Steve Girsky, GM vice chairman and acting president of GM Europe, the company will have talks with the factory's works council to attempt to prevent forced layoffs before the run-out of the existing Zafira. Opel has confirmed that it will save several jobs in its Bochum warehouse and that it is meeting with worker representatives about producing new components in the region.
About 3,300 employees are assigned in the Bochum plant, which is located in Germany's Ruhr valley manufacturing area. GM anticipates that its European operations, including the Opel and Vauxhall brands, will lose from $1.5 billion to $1.8 billion this year.
Earlier this year, auto executives in Europe have said that industry sales are not likely to be revived before 2014. Opel wants to cut expenses by $300 million and so it is eliminating 2,600 jobs by the end of 2012. Opel said last October that it aims to reduce costs by $500 million more for the period from 2013 through 2015.
The management of Opel, the IG Metall trade union and the German plants’ works council representatives had been in negotiations over the future of the Bochum plant. Opel is offering to guarantee German jobs until 2016 if the unions say yes to a deal to shut down the site when the production of the Zafira Tourer van is stopped, thereby lessening its fixed cost base. A shut down would mean that Bochum’s 3,300 employees will be losing their jobs.
Opel CEO Karl-Friedrich Stracke had said that the carmaker has to work towards achieving sustainable positive results for its operations in Germany. He remarked that the company has to make certain adjustments to its business to become profitable even when market conditions are difficult. Stracke noted that waiting longer before making any move would be “irresponsible” considering that the industry volumes for 2012 are expected to drop by 20 percent.