Tomorrow, Thursday, the management of Opel will present an allegedly comprehensive turnaround plan to its supervisory board, Reuters reports. If GM stockholders expect a big bang to lift their holdings, they will most likely be disappointed. The plan is expected to deliver less and that later. However, it looks like Opel might share pain and plants with PSA Peugeot Citroen.
According to the Reuters report, the plan ”spans everything from model strategy through brand positioning to new export markets, while avoiding the delicate issue of job cuts in Germany. “
GM wants to shrink fixed costs in Europe by running each plant at maximum capacity on a three shift basis. For that, at least one car factories must be closed. Also, people who know the business say it is a risky gamble. Three shift schedules often negatively impact quality.
The Bochum plant “will not see any investment spending under the plan,” says Reuters. Production could be shifted from Korea to Europe “in order to improve capacity utilization.”
Also, the Citroen C5 and Peugeot 508 could be produced at Opel, says Germany’s Frankfurter Allgemeine Zeitung. The FAZ has good contacts at the Metal Workers Union, and those contacts told the paper that the French cars could be built on a GM platform and made in Ruesselsheim. Opel’s Zafira would share a PSA platform and would be made in France. This way, Opel could close its Bochum plant in 2016, and PSA could shutter its Rennes plant.
So, if the German auto workers and by extension other German industrial workers who are under the same employment rules, have such good job security, why is the Euro car market in the toilet?
The main reason I see for this is that the workers are concerned that their incomes are in jeopardy if exports fall to other countries.
What percent of Opels production is exported to southern European countries that can no longer afford them? I thought this was a small number. If the German government wants to preserve the jobs, they should offer sales tax rebates and other incentives to help Opel sell more domestically. VW et al would howl in protest, but screw em if they can’t be sympathetic to their brothers in need.
Firstly, it’s not just the Mediterranean countries where sales are dropping – those weak economies affect the rest of Europe, largely because of the common currency.
Secondly, Opel has been stagnant for years. They will need a lot to reverse that. It’s just not a desirable brand.