Looking for a way to stop the chronic bleeding of money at it notoriously loss-making Opel division, GM has been crunching numbers to see what it would cost to close one of its European plants. Bad news for GM stockholders: Relief won’t come cheap, and it won’t come soon.
Shuttering one of the plants, along with the legally mandated golden parachutes, will cost €1.5 billion, or $2 billion, Germany’s Handelsblatt learned from sources at GM. Prime candidates for a cull are the usual suspects: Ellesmere Port and Bochum. No decision has been made.
Addressing the capacity glut will not only cost money, it will take time. GM has an agreement with the unions that forbids plant closures or firings until the end of 2014. Opel chief Karl-Friedrich Stracke wants to honor this contract. Breaking it would cost much more than the $2 billion.
The way it looks, Opel will lose money at least through 2015, with a huge loss when the plant will be closed. Until this happens, productivity and moral can be expected to deteriorate.