By on November 22, 2011

Opel workers and managers are deeply worried: It’s not just cuts that are coming. GM is sending a team of feared slashers. Says the Wall Street Journal:

“Vice Chairman Steve Girsky, GM’s second-highest-ranking executive, will become chairman of the Opel supervisory board. Tim Lee, president of GM’s international operations, and financial chief Daniel Ammann also will join the Opel board, the company said.”

Supposedly, GM was surprised and appalled that the European business hit GM’s bottom line with an operative loss of $292 million in the third quarter, despite increased sales. I am not surprised at all. I have always warned that restructuring Opel and cutting jobs is an expensive exercise. And those costs were mostly delayed into the third quarter.

Now Girsky and his team of handpicked hatchet men are coming. Girsky is a former Morgan Stanley banker who came to GM to assure Wall Street. The drooping chart of the GM stock requires a lot of reassurance. Girsky is one of the men the Occupy movement has on its target list.

What the hit squad from Detroit awaits in Europe shows an article in Automobilwoche [sub]:

“By sending Stepen Girsky as head supervisor of the Adam Opel AG business, GM puts its German daughter on the shortest leash possible. The former Morgan Stanley banker is known as a cost killer and a margin hunter without remorse. GM sends its Number Two to Germany to force a turn-around with American methods.“

„American methods“ are shorthand in Germany for hire and fire, for brutal decisions without finding a consensus with the workforce, for management by buckshot. It doesn’t go down well in a country of codetermination on a basis of parity. I would love to be a fly on the wall in those supervisory board meetings where half of the board is union members who will all claim that they don’t speak English.

The first verbal shot has already been fired. Girsky announced:

“To realize Opel’s full potential, we will continue to optimize its cost structure, improve margins and better leverage GM’s scale.”

That again means plants closures, and possibly Opel production in South Korea. Bochum could be closed.  Which will mean more red ink. Did I mention that firing people and closing plants in Germany does not come cheap?

By the way: Someone should tell GM that the Supervisory Board of a German AG cannot direct. It needs to listen to the recommendations of management, it can deny or approve them, but it cannot tell management what to do. Quite possibly, it is part of those “American methods” to overlook that little detail.

 

 

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23 Comments on “GM Sends Special Forces To Whip Opel Into Shape...”


  • avatar

    I don’t think it’s so much that it was a surprise as that it finally pushed “Fix Europe” to the front page of Akerson’s to-do list, and he’s clearly going to (try to) do it the fast-and-abrupt way. Pop the popcorn, this’ll be fun to watch.

  • avatar
    mike978

    Surely GM knows how it works “By the way: Someone should tell GM that the Supervisory Board of a German AG cannot direct. It needs to listen to the recommendations of management, it can deny or approve them, but it cannot tell management what to do. Quite possibly, it is part of those “American methods” to overlook that little detail.” since they have owned Opel for decades.

    The supervisory board cannot tell the management what to do. But who appoints the management? GM I assume since Opel is a 100% owned GM subsidiary and GM’s main European brand.

    • 0 avatar

      Opel is a freshly minted AG. It used to be a lowly GmbH, where the management has to jump when the shareholders say “jump.”

      In an AG, all the Supervisory Board can do is say “nein” to certain, clearly defined proposals which management has to bring to the board. Of course, the board can change the management to a more compliant one. That usually takes a while and is expensive. It also doesn’t send good signals.

      The Unions knew what they were doing when they demanded the conversion of the Opel GmbH to a new Opel AG. More power to them.

      I had to explain these subtle differences to American shareholders of German AGs and GmbHs. Those shareholders were quite seasoned, and nonetheless surprised. Americanized as I am, I always recommended a GmbH.

  • avatar
    daveainchina

    This should be a real lesson to the Occupy movement people. We’ll see if they learn anything from this. (then again it might not be a lesson for them)

    I think GM is backsliding, the launch of the Eco Malibu first instead of a general product launch. The high levels of cash incentives etc.

    I want to like GM but something tells me this is a sign that things are not going to go well.

    And I wish American automakers would focus more on quality products and less on short term stock prices. In the end I think everyone would be much happier despite the short-term pain.

  • avatar
    getacargetacheck

    Hard to see how struggling European-centric volume automakers can make money anytime soon with the economy tanking. Opel wasn’t doing that great when the economy was good. How important, really, is Opel to GM’s engineering capabilities? Might GM do better by harnessing German pride and giving Opel to Daimler or BMW for a dollar? If GM has any future in Europe it lies with Eastern Euro-made Chevrolets.

    • 0 avatar
      mike978

      I understand your point, but not all Euro-centric manufacturers are having problems. VW, BMW and Mercedes are doing well. It does come down to product (and image) so FIAT, Peugeot and others are having problems.
      As for Opel (and Ford for that matter) it has a reasonable market share of around 8% which is comparable to Honda in the US (similar sized market) so it is possible to make money. They need to do what has been done with the bankruptcies in the US and align production with sales (or export more, if possible).

  • avatar
    tikki50

    Im sorry but Opel has been around for over 100 years, there are no excuses for not performing, period. Lets be honest, the company has pretty much stayed in the red for years, while GM held it and treid to tweak it (mess around), and Opel just kept promising results. Its over, the lies, the promising are done and now daddy has his belt and is coming to whip you. Oh BTW thanks for all the Buicks even though most Journalists slam them as knock offs.

  • avatar

    Girsky, who was Red Ink Rick’s confidant and advisor, certainly isn’t the answer. if anything the situation gets worse. he was an integral part of the management that bankrupted GM. he should have been fired long ago. then again there is that theory of intentionally stripping GM of capital prior to the BK and then rinsing it of liabilities for the banksters who are now in the process of retaking “Shiny New GM”. either way, Girsky has no business even being employed in the industry.

  • avatar
    Ron

    Steve was not a banker at Morgan Stanley — he was a securities analyst. Rich brought him in to be an adviser — and probably to reassure Wall Street; he was never an operations guy. Nevertheless, he is extremely competent.

    • 0 avatar

      he’s a token, nothing more. incompetent and only a watchful eye for the banksters he truly represents. the UAW association is a fraud and a joke. he has no automotive knowledge or talent. I have more ability and experience than he ever will. he’s a wolf in sheep’s clothing .

      • 0 avatar
        Ron

        I’ve known Steve for 25 years. No automotive knowledge or talent? Steve has been a member of GM’s Board of Directors since July 2009 and serves on the Finance and Risk Policy and Public Policy Committees. He has been Vice Chairman of Corporate Strategy and Business Development since March 2010. Prior to that, he served as Senior Advisor to the Office of the Chairman of GM from December 2009 to February 2010. From November 2008 to June 2009, Steve was an advisor to the UAW. He was a special advisor to the Chief Executive Officer and the Chief Financial Officer of GM from 2005 to June 2006. He has been a member of the Adam Opel GmbH Supervisory Board since January 2010.

        While at Morgan Stanley, Steve was ranked the No. 1 automotive and auto parts analyst by Institutional Investor’s “All-American Research Team” annual investor poll for 14 consecutive years. Prior to coming to Wall Street, Steve was as an analyst on the overseas financial staff of GM.

        Steve holds a BS in Mathematics from UCLA and an MBA from the Harvard Business School.

      • 0 avatar

        None of which qualifies him like a few years selling Buick’s would?

        I’d personally love to meet Girsky. Everything I’ve read suggests and much deeper, broader understanding than you’ll find with most senior executives. He’s deeply trusted by both management and labor. How common is that?

        His ability to develop a strong relationship with the UAW, even while working with them on significant cuts, could even be a key reason for this new assignment.

      • 0 avatar
        mike978

        Ron, no point in getting into an argument with Buickman. In spite of his username he seems to have an issue with the current GM management. They have made mistakes (as all companies do) but some people wish to see them as completely stupid and useless.

      • 0 avatar

        he has a degree, so what? he advised GM right into BK and did irrepairable harm to tens of thousands. tell me one thing he has ever accomplished. on the other hand I have retailed over 25,000 vehicles, leading the USA 6 times. I have detailed and specific plans on how to regain market share profitably and in the short term. promote Girsky all you want, he’s a bankster puppet put there as a pawn without any ability other than to cut and enrich institutional banking interests. like it or not, them’s the facts folks.

        Buickman

      • 0 avatar
        mike978

        Buickman – I have read your manifesto/sales plan and a lot of it makes sense and seems reasonable and doable. I just wonder why it hasn`t been taken up, especially as most of it isn`t rocket science. Any ideas?

      • 0 avatar

        GM refused to try any of Return to Greatness because they planned an intentional bankruptcy. the international globalist banksters who owned the company also control many other manufacturers as they do central banks. their purpose was to cut wages, eliminate health care and pensions, walk away from liabilities, close facilities, cut dealers, and then retake control after stripping the company of capital and rinsing it thru a managed gov’t sponsored filing.

        none of their plans would have been possible with resurgent sales. do you suppose it’s a coincidence that banks shut off lending and have now reopened the spiggot? they did the most awful things imaginable in driving GM into the ground and I was nothing more to them than an annoying distraction.

  • avatar
    Pch101

    I have suspected for some time that GM’s plan to deal with Opel includes using Chevrolet (aka the new Daewoo) to replace some or all of it, while marginalizing Opel and reducing European production. This move would seem to confirm my suspicions.

  • avatar
    Freddie

    Isn’t Opel the brains behind anything decent or interesting coming out of GM? In the corporation’s internal accounting, doesn’t Opel get credit for all the Opel designs produced and sold under various GM brand names around the world?

    • 0 avatar
      Zykotec

      True, but judging by some of GM’s actions in the past, I don’t think they see the problem in removing a vital organ if that saves them money during the first few months.
      What many people seem to forget is that GM was never really a car manufacturer. They started out as a holding company, that has it’s main business in car manufacturers. All though they have tried to make what was originally very different manufacturers accept standardized production and design and development until we were left with (more or less) Opel, Chevrolet and Cadillac + some rebadges.
      GM executives don’t care, or know much about cars. They are beancounters ’till the end.


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