By on September 13, 2012

With their Washington overlords breathing down their necks, GM executives are pushing Opel for a definitive agreement to close Opel’s Bochum plant. According to the Wall Street Journal, GM “would like to be able to announce the plan before or along with its third-quarter earnings, which are expected to be disclosed Oct. 31.”

Keep smoking.

Says the Journal:

“The company, whose stock is languishing, would like to have an agreed-upon downsizing plan by then to signal to investors that it is moving aggressively to stem the financial losses at Opel.”

“Lifting the stock price ahead of November could have an impact on the presidential election that month. President Barack Obama backed a taxpayer funded bailout and bankruptcy restructuring of GM.”

Discounted by some commenters as a non-story, GM had bumped-up the date of its Q3 earnings announcement to occur before the November 6th election. Now, it needs good news to announce.

If GM plans to deliver the good news in a timely manner, it better get ready to pay a very high price.  Plant closures and firings are contractually verboten at Opel through the end of 2014.  Opel and its unions are in negotiations to extend this period through 2016. In that deal, the unions are supposed to agree to a delay of pay rises in exchange of two additional years of job security through 2016. According to Germany’s Automobil Produktion, this deal would save Opel between 40 and 50 million Euro yearly. Closing Bochum on the other hand could save GM $2 billion, Automobil Produktion says in a different article. Do you get a feeling for where the priorities are?

According to the same magazine, Opel’s works council chief Wolfgang Schäfer-Klug emphatically denies a report by Germany’s Frankfurter Allgemeine Zeitung that says that Opel is planning a reduction of 1,000 white collar jobs, 30 percent of the administrative workforce in Rüsselsheim.  Opel needs a works council agreement for the plan, and it sounds like Opel won’t get it.

The unions are in an unassailable position. Jobs are secure through 2014, and can be made secure through 2016 if the unions forgo, or even defer a pay raise. After that, the ax will fall,  workers will get up to $250,000 in severance, and then will be eligible for generous German unemployment benefits. It is doubtful that German metal workers will readily give up this position, only to advance Barack Obama’s odds in November. If they do, only for a very high price.

However, if you think that Opel will go on losing money just because Opel has lost money in the past 12 years, then GM’s head of European Operations, Steve Girsky, wants you to re-think that position.

Said Girsky to Bloomberg:

“You can’t have a mindset that it’s OK to lose a billion a year. That’s the mindset we’re trying to change.”

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27 Comments on “This Is Your Brain On Drugs Dept.: GM Wants To Announce Opel Plant Closure To Prop Up Obama...”


  • avatar
    GS650G

    So, any students in the class still think it’s a good idea for governments to take large positions in private companies to the tune of 20some billion dollars?

    • 0 avatar

      As long as the US government STOPS funding electric vehicles I’ll be happy. If the market really wants EV, let the PRIVATE SECTOR deal with it.

      However… if the Government wants to invest in building a Veyron-killer that does 300 mph, costs less than $200,000 and offers me enough space to be comfortable in it, go right ahead!!!

      • 0 avatar

        Tesla Model S is probably as close as you’re going to get :).

        A genuinely fine performance sedan by all accounts.

        I’m against government “investments” on principle, but I seem to have made an exception for Elon Musk. He delivers on everything he promises, in both SpaceX and Tesla, and that’s pretty amazing.

        D

    • 0 avatar
      billfrombuckhead

      I do because that’s what all our socialist trade competitors do. Remember the Korean government bailing out Hyundai and Kia? Rememeber the French government bailing out Nissan so Renault could be a world player?

      Maybe we should have just let the People’s Liberation Army take over GM? That’s what brain dead shortsided Republicans want.

      Heck, the PLA would probably do a better job for American workers and consumers than than Cerberus or Bain capital.

  • avatar
    vaujot

    I think one should really question the 1 Billion loss figure. I talked to an Opel engineer the other day who confirmed my suspicion that GM’s European development center in Rüsselsheim and its staff are on Opel’s books and payroll. I think it is worthwhile exploring whether these development services rendered by Opel for the rest of GM are properly accounted for and compensated. As far as I am concerned, GM doesn’t get the benefit of the doubt in this respect.

  • avatar
    dejal1

    If GM throws Opel under the bus for political reasons, I for one, would not buy an Opel. Not because of what GM did, but because what the workers will do. Human nature being what it is, I don’t see them building the best cars they can if this happens.

  • avatar
    Ron

    Seriously? Taking the Wall Street Journal as an unbiased source on GM taking actions to help Obama?

  • avatar
    stars9texashockey

    @Ron—Yeah you’re right we should rely on unbiased news sources like the NY Times.

  • avatar

    Yes European Unions seem to have more “teeth” than the ones here in North America and yes I would suspect the quality will take a Nose dive of this closure happens!

  • avatar
    shelvis

    “Washington overlords”
    Really, are you still beating that drum?
    So tired of the anti union, pro globalism, conspiracy theory nonsense here.

  • avatar

    “Discounted by some commenters as a non-story, GM had bumped-up the date of its Q3 ”

    It is not a non-story and I wonder what GM’s intentions are. Are they expecting an impressive quarter so the President can benefit on election day, justifying the bailout? Were they forced to carry forward expenses in Q2 so that they can generate impressive numbers in Q3 right before the election? Or is GM expecting an ugly quarter and wants the other guy to win? Which would probably be the best thing to happen to GM. Romney would sell the Govt owned shares right away which may temporarily get GM bad press but in the long run they are much better off. GM will also have an upper hand in union negotiations. They will be able to choose where a particular product is built depending on what makes the best business case (I believe GM was strong armed after the bailout to move Sonic production to the US from South Korea and next gen GM full size trucks from Mexico to US) and most importantly the extreme right need not boycott GM anymore to make Obama look bad.

  • avatar
    el scotto

    Bochum has lost money for years and will probably lose money for years. In a rare case of using common sense, could GM be shutting the plant down because it loses boatloads of cash? Excess capacity, the one that costs the most is the first to go.

  • avatar
    DC Bruce

    Really this whole business reeks of delaying the inevitable, not only the closing of Opel but, perhaps, the dismemberment of GM. Dispute dumping most of its debt through bankruptcy (and Pch101′s comment about the Volts development cost was brilliant), GM still seems to be unable to manage its affairs with any degree of competence. The Volt is a car that few people want to buy (because, for most people it doesn’t make economic sense as compared to any number of other, cheaper hybrid sedans). The new Malibu — Chevy’s supposed volume leader to contest that market space against Honda’s Accord, Toyota’s Camry, Missan’s Altima and Ford’s Fusion — is generally agreed to be inferior to the car it replaces . . . and the launch was blown.

    The list just goes on.

    There are folks out there who seem to know how to run a car company in today’s tough market, where excess capacity is the norm . . . but none of them seem to be working at GM.

  • avatar
    Lampredi

    I prefer the Rachael Leigh Cook version.

    http://www.youtube.com/watch?v=iE7ukc7MV-k

  • avatar
    CJinSD

    It doesn’t matter if GM’s 3rd quarter financials have to be revised downward and their plans to kill an Opel plant are pure fantasy. As long as the election happens before their announcements can be fully vetted then they’ll have achieved their goal of helping the fascists. The end justifies the means, after all. Nobody will be paying attention after the election anyway. How many people here know that there was a beheading on Virginia Tech’s campus during Obama’s inauguration? No bad news gets reported with an Obama victory.

    • 0 avatar
      billfrombuckhead

      Obama’s a fascist? I bet Hitler and Mussolini would have welcomed him with open arms.

      If Opel must go, so be it. Somebody has to cut capacity in Europe, at least the workers have a strong social safety net.

    • 0 avatar
      DOF_Power

      You do realize that between Bain Capital (MR) and JP Morgan Chase (Obama) there is(/would be) not difference ?!

      The big BSing has been going on for a long long time.

    • 0 avatar
      mike978

      Inaugurations are normally big news whoever is the President so hardly a unique Obama story. Plus what benefit is there to him for a criminal case being suppressed int he news (although I bet it was well covered in local news).

      Now he is a fascist, I thought he was meant to be a socialist. True and keep the hyperbole straight.

      • 0 avatar
        CJinSD

        Centrally planned economy with corporate partnerships, eugenics through his turbocharged abortion efforts, class warfare with faceless villains keeping the majority down, facially absurd morality claims, manipulation through indoctrination: Obama is a fascist, although it is no coincidence that socialism is a chief component of fascism. Remember the Obama-Jugend being trained to sing songs in praise of this antichrist?

  • avatar
    vaujot

    If you google “beheading on virginia tech cammpus”, you get 194,000 hits. Not exactly evidence of a media conspirancy to suppress this story. I admit, I had forgotten about it.

  • avatar
    Boff

    I think the redoubtable Bertell is onto something here. Even Al Qaeda is getting in on the act: Rush told me that they served up Osama on a platter to the SEALs to help Obama get re-elected.

  • avatar
    oldyak

    Yes to all the above…?
    The longer that G.M. survives on the government teat the poorer we will all be.
    OUR government GAVE Chrysler to Fiat but at least they are making a go of it.

  • avatar
    billfrombuckhead

    Since the bailout almost a 1/3 of all cars old in the US have been from GM and Chrysler. What would the rest of the auto industry have done to their prices if they didn’t have that competition? What about the value of customers cars? What about all the lost jobs and the implications of that? What about favoring foreign state socilaist competitors vs our own companies and people?

    “The poorer we will all be”, hardly.


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