By on January 11, 2012

When thinking about creating cost efficiencies, moving jobs to Asia usually comes to mind. GM has a different plan to bring profitability back to its hemorrhaging Opel unit. GM is considering bringing Chevrolet production from its Korean plants to Europe. In exchange for delivering jobs, GM expects concessions from the unions that would clear the way for a major cost-cutting operation necessary to stop the bleeding and to save the German patient from otherwise certain death. This is at the heart of a detailed report just filed by Reuters correspondents Christiaan Hetzner in Frankfurt and Ben Klayman in Detroit.

Says Reuters:

“One idea would be shifting production of the high-volume Chevy Cruze small car to Gliwice, Poland, and then swapping production from that Opel plant to others in Western Europe, according to the sources, who asked not to be identified discussing union strategy.”

“Another part of the proposal under discussion would bring output of the seven-passenger Chevy Orlando crossover to the Bochum, Germany, plant, the sources said. Bochum has long been considered the Opel plant most likely to be closed.”

According to the report, the two parties appear to be close to agreement. A lot of the information from Germany originated from “people close to the leadership of German union IG Metall,” as the report says.

There is not much time left. GM wants to have a clear strategy for Opel by the end of March, Reuters learned. GM CEO Dan Akerson is getting increasingly disgusted by the flow of red. Plans to take Opel bankrupt appear to be off the table, at l;east for now and until needed in the game of carrot & stick.

On Tuesday, Akerson told Reuters in Detroit:

“In Europe, I don’t think they have a Chapter 11 option. I know it’s not the same set-up as here. That being said, we’re working hard in Europe. We’re going to try to scale our production with the market opportunity.”

In 2011, GM exported approximately 250,000 vehicles from South Korea to Europe. If the deal goes through, jobs instead of cars will be exported to Europe. Let’s see what the militant South Korean unions have to say about that.

 

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8 Comments on “Reuters Report: GM Plans To Shift Chevy Jobs From Korea To Europe To Save Opel...”


  • avatar
    gslippy

    What a train wreck this will be.

    Opel’s money woes have occurred while they enjoyed full employment, so how does filling its plants with workers help matters in Europe? Hello? There’s a reason GM has plants in Korea!

    And no, the Korean unions won’t take this lying down.

  • avatar
    Robert.Walter

    Akerson: “I don’t think they have…”

    Not a very definitive statement…

    Geez, who is briefing this guy, Mucko the Plumber?

    I get that GM eliminated the pre-meeting to the pre-meeting in order to speed things up, but shouldn’t a CEO have a firm grip on the facts surrounding his options, with these being endorsed by the BoD, before he embarks on a major change in strategy? Is Mucko also doing Scenario Studies and Strategic Planning at GM?

    • 0 avatar
      Fusion

      :D

      He is right with his “guess” though – german bankruptcy law is a lot more strict than american. There are some possibilities for saving a bankrupt company, but overall liquidation is a lot more probable than in the US.

      And one shouldn’t forget that, even with the rather generous US Chapter 11 regulations (look at airlines for an example… ;)), GM and Chrysler would not have been savable without govnerment intervention…

  • avatar
    carbiz

    Okay, but since GM appears to be on a tear, with sales up in virtually every market, it is a safe bet that sales of most GM vehicles will continue to increase. Perhaps there will be some short term pain in Korea, but it’s possible that as Asian sales continue to climb, bodies will be rehired to pick up production at existing factories in Asia.
    I doubt very many people realize just how many changes GM had to make in the past 3 or 4 years. Seriously. This is not a pizza stand.
    The dealership network in several countries has been revamped. Factories were closed, sold off, expanded or renovated. Virtually every vehicle in GM’s arsenal has been replaced or considerably redone since 2008. (Heck, the Malibu is being replaced – again. In only 5 model years! Compare that to the ’97-’03 model!) They’ve had to deal with the logistical, economic, political and PR challenges of bankruptcy. They’ve stood eyeball to eyeball with the CAW and UAW to finally reign in legacy costs and labor costs in general. Yet, through all these trials and tribulations, it has also managed to regain it’s #1 world sales position, retain it’s #1 status in North America and persevere the stinging commentary from Capitol Hill, the media and worst of all – the peanut gallery on the internet.
    And they’ve managed to do all of this, with the continued bulls-eye stenciled on their backs, being as they will always be the target for all the other OEM’s to bash, joke about, benchmark against, or whatever. Afterall, as the largest, most homogenous market in the world for 100 years, North America made for a pretty desirable target over the past 40 years. After 45 years of full frontal assault, 15 or so world manufacturers have managed to eek out a 50% share of the market here. The other 50% occupied by, the same who have occupied the top 3 positions for 80 years.
    Instead, let’s focus on the mistakes GM made previous to 2008, all the way back to the Corvair.
    Personally, I think GM was better off staying at #2. Look at how #1 worked out for Toyota!

  • avatar

    if that creepy bankster Girsky is involved, don’t believe what you read.

  • avatar
    Seán Moloney

    GM Europe. To me this is the very definition of an oxymoron. And GM is just the very definition of a moron. How many companies is it going to take to crash burn before GM realises that it just can’t do European. Opel would have been better off being sold to Magna like GM had agreed to do back in 2009 before cancelling the deal because Opel is vital to GM’s European presence. The only problem with that is that in it’s current form Opel is nothing but a never ending money pit for GM. But we all know GM doesn’t sell brands, they only destroy them. Oh well.

  • avatar
    Diewaldo

    I think this is a very good descision!

    Opel is actually more important in terms of R&D capacities than Daewoo in South Korea. As Opel was denied by GM to enter certain markets in favour of the Chevy brand this seems like a fair deal.

    After all the Opel Mokka and the Opel Antara are built by Daewoo. So why shouldn’t it be the other way round this time?

    Also the Cruze is selling quite well in Eastern Europe … a production there could even boost sales.

  • avatar
    Robbie

    This may just be the equivalent of Gillette, which gives the shaver away and makes a killing on the razor blades, blaming the shaver division for its losses.

    I suspect this is all posturing on the part of GM, in order to get concessions from the German unions. By not giving Opel credit for developing cars and platforms other than for its Europe sales – and not allowing it to be present in many markets – obviously GM can create a loss in the books for Opel.


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