Opel Prolongs The Pain: No Layoffs Or Plant Closures Through 2016
Unions reached a last minute deal with Opel: Plant closures and layoffs are off the table through 2016. This according to information given by works council chief Walter Einenkel to the usually reliable Westdeutsche Allgemeine Zeitung.
The deal needs to be approved by union members. A meeting has been called for today. There is no official statement by Opel or the unions.
Should the report be confirmed, then GM would do just the opposite of Ford. Ford announced the closure of three European plants last week, a painful and costly cut which promises to bring Ford Europe back into the black by 2015. GM on the other hand tied its hands through the end of 2016. Layoffs and plant closures would only be possible in 2017, guaranteeing losses in Europe for most if not all of the decade.
Opel owed its German workers some $15 million due to a 4.3 percent payhike negotiated for all IG Metall workers in May. Opel had until the end of October to either cut a deal or to pay the deferred raise in one lump sum. Opel must be pretty desperate to trade away its freedom of action for what amounts to pocket change.
In May it was decided to move production of the Opel Astra to Opel’s UK plant in Ellesmere Port by 2013. It was expected that the Bochum plant would be shuttered by the end of 2014 when a previous agreement with the unions will ran out. Under the new agreement, the agony will be prolonged by another two years.
Reuters confirmed the report, with qualifications. According to Reuters, Opel and the unions agreed to keep the plants open until 2016, and to continue discussions about a restructuring of Opel. However, the agreement can be terminated depending on the outcome of the discussions. The deferred raise of 4.3 percent will be paid in November with a lump sum payment. After that, the salary raise will be deferred again. According to Reuters, the Bochum plant cannot be closed before 2016 anyway. Production of the current Opel Zafira is scheduled to end in 2016.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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But in 2016 there will be next reelection of Barack Obama or whoever replaces him (probably Biden). So my guess is - GM will postpone again. Ford does not care because it is not Government run company. Funny thing is how European car production will look like in 2016. It is four years of increasing pain. Somebody have to give in and disappear. And French, Italians and Germans are not those. There would be rather World War III than any of these countries close any plant or layoff workers.
The stock market is going to kill GM. I can't believe that they would allow a union to tie their hands like this. Maybe they have plans to make PSA's instead?