By on March 31, 2012


“This would be the most expensive plant closure of all times,” warned Rainer Einenkel, chief of Opel’s works council and Vice Chairman of its supervisory board.  “This would cost GM billions,” Einenkel said today at a news conference following a staff meeting in Bochum. “Opel would not survive this.”

A few days ago, Germany’s motor mouth Ferdinand Dudenhöffer had painted a semi-rosy picture. Sure, paying each employee $200,000 as severance would hurt. But closing Bochum would save around $280 million a year, three years later, the investment would be paid back, Dudenhöffer argued. Payback would not happen until 2018, closures are only possible starting in 2015.

Dudenhöffer and GM management are dreaming, says Einenkel. There are no 3,200 workers, but 5,000. Some 1,800 are loaned to partner companies, but have a contract in Bochum. Workers “won’t go voluntarily,” Einenkel told Reuters, signaling costly fights in the courts. The Bochum plant sits on top of former coalmines, no investor will buy the plant, fearing uncontrollable environmental cleanup costs. Closing Bochum could also severely damage Opel’s brand, Einenkel said.

Before that happens, Opel will severely damage GM earnings , for many years.

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33 Comments on “Opel Labor Leader Threatens Mother Of All Plant Closures...”


  • avatar
    Caboose

    Wait, I’m confused. So Opel labor is threatening a strike so broad and so deep that “Opel will not survive” it? I thought that is exactly what GM wanted. Am I missing something? Is German labor that willing to cut off their own nose to spite their collective face? Or is there some quasi-secret collusion between GM brass and German labor?

  • avatar
    Robert.Walter

    Einenkel seems to have forgotten to add Fire and Brimstone to his list of plant-closure bogeymen…

  • avatar
    CJinSD

    This will be such a hilarious soap opera to watch if we can get a less corrupt administration in place before the bills come due.

    • 0 avatar
      highdesertcat

      What won’t be funny is that GM will need another bailout from the US government before it is all said and done. We haven’t got to the crying part yet, and the fat lady is just starting to warm up her singing voice.

      The Opel subdivision is going to keep dragging GM down and the German government is no longer willing to protect their financial investment since they have determined that GM should put more money into Opel.

      The precedence has already been set by Bush and Obama. They bailed out GM. They determined that GM was too big to fail and too important to the US and global economy to liquidate.

      Ergo, GM will not fail in the future either because the US government will pick up the tab to keep GM going at US taxpayer expense, even if it means funding German, Belgian, UK and French operations in the future.

      Makes you want to run out and buy a GM product, don’t it?

      • 0 avatar
        CJinSD

        That’s why I said it would only be funny if we get the organized-crime-bought regime out of office in time. Hopefully, the alternative won’t be inclined to print money to prop up Europe and a the Democrat campaign funding machine.

    • 0 avatar
      doctor olds

      GM now has plenty of cash and financial strength to afford whatever it takes to fix GM Europe, even multi billion dollar plant closure costs. There has not been any cash flowing from treasury to GM since the bankruptcy and re-capitalization. It is exceeding unlikely there will be anything like a “bailout” again in the future.

      • 0 avatar
        highdesertcat

        Yeah, I keep hearing that too, and reading it in comments from GM fans. I’m cautious about accepting that.

        I heard way back in 2007 and 2008 the same loud protests, from the same fanbase, that declared loudly and vehemently that GM would never fail. Deja Vu all over again?

        Since the UAW was successful in driving GM (and Chrysler) into bankruptcy and coercing the federal government to bail out GM and assure the UAW that they could continue to live the high-life at taxpayers’ expense, is it not reasonable to forecast that the Opel leader is doing the same thing to ensure survival of GM’s German operations, at US taxpayers’ expense?

      • 0 avatar
        doctor olds

        @highdesertcat- Back in 2007 and early 2008, no one knew that a financial crisis would collapse the car market in America. Today, GM is a completely different company, particularly with regard to its cost structure and balance sheet. Old GM would probably have lost 10′s of billions with last year’s still depressed volumes. The new company generated an operating profit of $9.2B.
        Your points about the union’s interest and impact are valid, though it is an exaggeration to say the UAW folks are living the high life. There is a lot more to the company than one of its unions.

      • 0 avatar
        CJinSD

        I think every bit of it was completely predictable, from the moment the government started dictating what loans were approved to the day it imploded. People had been talking about the vulnerability of GM and Chrysler throughout too, but they were so easily dismissed by the ‘this is a new paradigm you don’t understand’ folks that only the prognosticators remember saying it was a house of cards. Here’s another hot tip: printing 44 cents of every dollar the government spends while promising future spending will grow massively and crippling our real energy sources is the road to ruin. Feel free to be surprised again.

      • 0 avatar
        highdesertcat

        I realize that we live in dynamic and turbulent times where the fortunes of a business can turn on a dime. But GM is not as strong as the government and the GM people lead us to believe.

        If GM was even remotely strong or viable, its stock would not be in the tank. Political machinations aside, GM was weak before 2009, and GM is weak now.

        The German unions recognize the sign of weakness and are exploiting it. That’s why the Opel leader is threatening a mother of all plant closure because he knows that would kill GM a second time.

        Obama, the ‘crats and even many Republicans are not going to let GM die because of Opel’s strike. GM is too big to fail. The precedence for bail outs has been set. To let GM die this time around would prove the automotive pundits right in that GM is a zombie.

        The unions know this, are playing off it, and expect the predictable results of taxpayer funded bail outs if they push hard enough to threaten GM with closure. Smooth move Exlax!

        GM was bailed out and put on life support once and will be again if strikes or liabilities force GM to declare itself insolvent again.

        While I agree that there is a lot more to GM than its unions, those unions have proven themselves to be a detriment to GM and other domestic auto manufacturers before.

        I will not be surprised if the US Treasury has to come to the rescue of GM again.

        And as far as the UAW living the high-life? Well, for all the Americans who were not bailed out and are currently out of work, I am reasonably sure that those people would gladly live the life of the UAW members today.

      • 0 avatar
        doctor olds

        @highdesertcat- GM is publicly traded and the financials are an open book. Their income,low debt and pile of cash are facts, not opinion.
        GM and Ford stock have been almost in lock step since the IPO. If GM is in the tank, so is Ford.

  • avatar
    mike978

    Since nothing can be done until 2015 (actually how tight are those guarantees?) I would just not fill vacant positions. There is always some staff turnover (retirements, death, life changes etc) and over a 3 year period perhaps 10% of that 5000 staff would leave. That would reduce the bill.
    GM needs to bite the bullet. It is much better to pay up the $2-3 billion it would cost (1/3 of their current profits) and be done with it. Even if the pay back period is 5-10 years. Long term thinking is required.

  • avatar
    Robert Schwartz

    If GM wants to be a bitch about it, they could re-register the shares of Opel – Germany in Herr Dudenhoffer’s name, and mail them to him. Then he could pay his people far more than the company is worth in any conceivable scenario.

  • avatar
    gslippy

    As I’ve said before, the union can strike, GM can close up shop there, and then the union can declare victory because they stuck it to The Man. Brilliant.

  • avatar

    I thought Saab was the big, bad problem. And seeing the crap thats hit the road since their demise, by many mfgs, they are missed. Now it turns out that Opel & Vauxhall are many times worse. Does GM have any clue which head to pull out of their A$$?

  • avatar

    I believe him – Germans do not go away easy. Last time there was a factory closure in Germany we got WW2 and before that WW1. When lot of Germans are unemployed – rest of world – beware!

    • 0 avatar
      european

      wooow…. not even one rudimentary post can exist without comments about na.zis and ww2

      americans are so brain-dead & trained like monkeys to press just one damn button… over and over again. and still they get confused… tz tz tz

      • 0 avatar
        gslippy

        @european: Some Americans, yes. I hope you know not all Americans are still fighting the war. :)

      • 0 avatar
        Campisi

        Speaking of buttons, there’s a couple on your keyboard that allow you to properly capitalize letters when grammar calls for it. With your fully-functioning and clearly-superior non-American mind, surely you can handle it…

      • 0 avatar

        Who said I am American? And yes Germans started two World Wars because they were out of job. And German government today is so anxious to keep Germans employed and busy because otherwise… this time it will be a nuclear war. Seriously, German drove weaker countries in Europe known as PIGS out of business and still deny them basic rights other countries in the world naturally enjoy. Germany essentially enslaved half of the Europe and keep pumping money out of these poor countries. And then make a big deal giving back small amount in exchange for austerity.

      • 0 avatar
        Robert.Walter

        I tried to reply earlier but my input was flagged for moderation and I have no idea why. It was a good and moderate reply.

  • avatar
    Robert.Walter

    Anybody else having trouble posting?

    I tried to post the following twice but it did not appear:

    European: before you begin throwing stones in glass houses, consider that a similar argument could be made with greater validity that it took two world wars, an American-influenced Grundgesetz, American billions in Marshall Plan and military aid, a largely open US market for german (and japanese btw) manufacturers to ship into, and about 20 years of allied occupation to get the Germans to stop “pressing their one damn button.”

    • 0 avatar
      european

      know your history mr walter: germany was propped up after ww2 to keep the communists out and not to make the germans happy & docile.

      anyways, this is a post about opel & cars… i bet many readers will agree with me that they also dont wanna read any history/war/political bs. stop it.

      • 0 avatar
        Robert.Walter

        Knowing ones history is only part of the story mr. euro, the other part is being to process both context and multiple facts into a meaningful whole, rather than taking a one thing or the other approach.

        I could expound on the nature of the exingent circumstances under which the Morganthou Plan (conversion of the post-war german evonomy into an agrarian one) was scrapped, or on how these same circumstances led John J. McCloy to authorize the early release of, and return of confiscated assets to, convicted war criminals like Alfried Krupp v.B.u.H. but I don’t want to irritate you with the facts and reality of post-war geo-strategic politics.

        I don’t, however, mind further irritating you by suggesting that before you use a broad brush to deal with such topics that you consider whether you are willing and or able to defend any ad-hominym statement and/or aggressive positions should they be challenged.

        Further, if you don’t like the content of a lively discussion, or if you have nothing constructive to add or ask, then isnt it simply easier to move on to the next thread?

        Finally, you’re neither my mother, nor the moderator of this site, and i neither need, nor desire, your authorization or approval, so I don’t believe you have any business, or authority, to go about ordering me to stop anything.

  • avatar
    prthug

    So the first big decision of the “new and improved” GM Board of Directors was to stop the sale of Opel because it was such a bad idea. Seems shareholders are out about $2 billion at this point…and the “new and improved” GM leadership team is going to show the simpletons who came before how to get a deal done. Hmmm. How’s that workin’ for ya now? Wonder if we’re going to see all that accountability of leadership that was supposedly lacking with the old BOD? Girsky and Akerson have put GM into the mother of all quagmires and they’re not going to get out. Magna was ready to take this dud and GM would have been pretty much out of this nightmare. Instead, Opel will remain in the same vice it’s been in for decades…it’s got more than twice the capacity it needs, the entire industry is aligned against it politically because killing Opel is seen as the best way to bring capacity down in Europe, and as the post here makes clear, you ain’t closing any plants in Germany without paying billions. I suppose the new geniuses running GM will protest that the economic recession that Europe is heading into was unforeseen. Of course, that excuse worked great for Wagoner and Henderson (not). This is the single biggest drag on GM’s stock price and thus the ability to pay back the American public. Akerson and Girsky have failed miserably in their very first test of leadership. And yes, that’s the sound of crickets chirping you hear from the GM Boardroom as the new group of bystanders watches helplessly.

  • avatar
    thx_zetec

    There are no simple solutions.

    Maybe GM might have been better off with a full-blown, world-wide bankruptcy (WWB1) this would have given them ability to walk away from all their quagmires. The US Federal bail-out flipped them a few tens of billions but left the euro-swamp un-drained.

    Some posters say that Open can simply be folded, but I don’t think this is the case. For worse or for worse, GM itself is directly linked. Trying to fold Opel is prob’ly like trying to say that GM pension system would die with Pontiac.

    I’m sure people much smarter than me, and with much greater legal and accounting knowledge have looked at the options. What might be missing for the closure option is courage: what executive would want to take this hit when you can simple kick the can down the road? This is like pulling off a band-aid so large it rips your arm off.

    BTY regarding “european” comments about Americans: you are right, all Americans stereotype every single last one of them. Including me.

    • 0 avatar
      charly

      Opel is not a quagmire. GM accounting is the problem. They don’t count the Opel developed cars sold in South America and China as money for Opel and this leads to a situation in which it is very hard for Opel to make money.

      • 0 avatar
        alluster

        Well said. Opel gets no revenue from Opel designed cars and platforms sold across the globe. All of GM’s car platforms were developed by Opel, the Gamma, Delta, and Epsilon. Delta based Cruze is GM’s top seller globally. Opel based Excelle is China’s #1 seller for all brands, Opel based Antara is SE Asia’s best seller for GM. Even the hot selling and insanely profitable Theta platform was co-developed by Opel.

        GM can make Opel profitable today by moving production of all cars sold in Europe to Europe. That would mean GM international operations would make less profit. GM must have calculated importing cars from low wage countries will more than offset any costs incurred for plant closures in EU.

        Like some poster mentioned, GM should make Opel a separate company and make the union the new owners and let them deal with it. Send a note to Opel’s most talented people they have a job waiting for them at the New GM Europe. GM rather sell 1 million cars a year at a profit, than sell 2 million at a loss. North American operations cannot be Opel’s sugar daddy forever. The management is in no mood to negotiate anymore. No amount of concessions by the union seem to stop GM from closing two plants by 2015.

        Most of Opel’s problems are media blown. Losses in 2011 have more than halved to $747 M from $1.8 B in 2010. IIRC there was also a one time charge in 2011 from a plant closure in Belgium. At least GM is tackling the problem head on. Who here has heard of Toyota’s losses in Japan. GM can run from Opel, Toyota can’t run from Japan.

        Toyota Domestic operations (Japan)
        FY 2010 – $2.7 B loss, FY 2011 – $3.6B loss, FY 2012 first 9 months – $3.8 B loss.

        page 11: http://www.toyota-global.com/investors/financial_result/2012/pdf/q3/presentation.pdf
        Page 9: http://www.toyota-global.com/investors/financial_result/2011/pdf/q4/presentation.pdf

        So Toyota loses 5 times as much per year and they don’t seem to be doing much about it.

      • 0 avatar
        doctor olds

        @Charly & Alluster- Your model of the financial interactions between Opel, really GM Europe, and the other regions is flawed.

        The European Product development function does get funding from other operations that use their work output, not only
        “their own” plant’s vehicle and component production.

        As Doctor Deming preached, what is most important is the success of the whole organization, not just a sub unit.

        Opel losses will evaporate with a modest economic recovery in Europe. The projected savings from the PSA linkup alone will more than offset current losses.

        With that said, GM leadership is not going to sit and wait for conditions to improve.

  • avatar
    getacargetacheck

    Here’s a simple solution: sell Bochum to Audi or BMW for one Euro. Both companies could probably use the extra capacity. GM could then contract with the new owner to buy Astras and Zafiras for a set period of time. The plant remains open and German. Everyone is happy.

  • avatar
    Joss

    Vice-president Rainer von Ribbentrop blowing.. brakes need be applied slowly.

    GM needs to go to Washington and get some external pressure on Merkel.


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