By on January 22, 2013

Go get them, tiger!

So far, Steve Girsky, dispatched on a mission impossible to Deutschland to clean up Opel, has been dancing like a butterfly, no stinging involved. Apart from targeted leaks, and an announcement to stop making cars in Opel’s Bochum plant after 2016, which really did not surprise anyone, there were no big dispatches about the heroics of Steve the hatchet man, who was sent to the Old Country to stick it to the socialist metalworker Nazis. Today, and most likely after increasingly impatient prodding from Detroit, Steve took his gloves off, and a swing at some 20,000 unionized workers in Germany.

With Uncle Sam having announced its impending exit from GM, and along with it an end to stingy executive salaries and a life without private jets, the rulers at RenCen have their sights set on cashing in. For that, the stock must go up, and the stock is being dragged down by Opel. Steve was sent to fix it.

Today, Steve Girsky wrote a letter to all Opel workers, announcing that Bochum might stop making cars at the end of 2014 instead of after 2016, as announced earlier, Germany’s Automobilwoche [sub] says. The only way to keep the plant open for another two years are concessions by the workers, says the letter. Good luck with that, Steve, and bad timing.

As mentioned here ad nauseam, Opel workers have a contract that forbids plant closures and firings before the end of 2014. Girsky knows this contract is etched into granite, which would be quite painful if broken. His letter says that he will abide by the contract – but not for two years more. The unions did cut a deal with Opel last year, forgoing wage increases they were entitled to by law, in return for two more years of keeping plants open. This deal can be canceled if the negotiations break down. In that case, Opel must raise the salaries, and make good on the delayed payments.

According to Reuters, “GM is demanding that Opel staff wages in Germany be frozen until the unit returns to profit.” Reuters also writes  that “GM’s European operation, which consists mainly of Opel and UK-based Vauxhall following the sale of Saab to Spyker in 2010, has racked up around $16 billion in losses since 2000 owing to uncompetitive models, a sickly brand image and more recently a sharp plunge in the European car market.” Anyone who wants to wait for a raise until  this corpse will be profitable again can claim sick leave for insanity.

Bochum works council  chief Rainer Einenkel called the letter “a declaration of war.”  He reiterated that the workers “will not pay for their own funeral.” Instead of making concessions, expect them to demand the pay raises according to the “Flächentarifvertrag der Metall- und Elektroindustrie.”

In his letter, Girsky tells Opel workers nothing they would not already know:

  • “The situation in the European market is catastrophic.” Sure, but workers at Volkswagen, BMW, Daimler don’t have to worry.
  • Opel depends on this market. Other German makers have emerging markets for growth and volume.
  • “It is an illusion to believe that we might get saved by a market that will recover soon.” Sure, other German makers are saved by emerging markets.
  • “We need a solution by February.” Good luck with that. You honestly don’t expect to threaten someone you can’t fire before January 2015?

The unions are appalled. Not by the demands, but by the abject stupidity. Said Metalworker Union chief Berthold Huber to the Frankfurter Allgemeine Zeitung:

“Never in my long career did I see negotiation as badly prepared and conducted as what Opel’s management has been dishing up since the early summer of last year – and that means something.”

Steve Girsky was dispatched to Germany in early summer last year. Huber had no further comments.

Opel’s work council effectively told Girsky to use the letter for purposes of daily hygiene.  According to Reuters, the unions told Opel that they will not agree to a wage freeze.  In a statement, released by the German works council at Opel, and signed by a union negotiator, IG Metall says:

“This would mean that Opel would not fulfill the industry-wide wage hike in Germany on a sustained basis and effectively no longer be a part of the industry-wide wage structure.”

Industry-wide negotiated wage agreements are the backbone of the German employer/worker relations and a matter of law.

A union that gives him the finger, or worse, takes GM to court for breaking German laws, leaves Girsky only one decisive way out of this mess: Take Opel bankrupt. The first steps towards a bankruptcy without giving up Europe completely have already been taken.

Poor Karl-Thomas Neumann. He will inherit the biggest mess ever when taking over as CEO of Opel on March 1. He will miss the cushy days in China, and the occasional run-ins with Winterkorn and Piech will feel like a holiday compared to what awaits him. Already dubbed the ostrich, he should stick his head in the sand and wait for another CEO.

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17 Comments on “Opel: Steve Girsky Takes Off The Gloves. I’d Keep Them On, The Climate Will Be Icy...”


  • avatar
    JimothyLite

    Now, Bertel, Karl-Thomas Neumann looks no more like an ostrich than Steve Girsky looks like a wise old owl.

  • avatar
    analoca

    The guy in your picture is not Girsky but Karl Friedich Stracke – no longer with Opel.

  • avatar
    Ron

    Calling Girsky a “banker” is a misnomer. He rose to fame as the top-rated automobile securities analyst on Wall Street.

    As far as his policies are concerned, what else would you have GM do? Keeping high-cost factories when Opel has huge overcapacity makes no business or economic sense. At the least, it drains resources from the parent company, resources needed to develop new product and to weather the next economic downturn. North American workers “bit the bullet”. Opel workers need to do the same.

    • 0 avatar
      Ron

      I tried to edit my “Open” typo to change it to “Opel”. Your website said I didn’t have permission to edit my own comment.

    • 0 avatar
      prthug

      Ron,

      How about selling it to a willing supplier with money provided by Russia and Germany and significantly reducing your exposure while retaining much of your product development capability? Oh right, that was the plan that would have had GM stock at double the current level according to Morgan Stanley and would have avoided all this. Only Girsky and Akerson killed the deal because it was so short-sited. Glad the A-Team is in charge now.

      • 0 avatar
        Ron

        Yes, it would have been preferable for Opel to have been sold to Magna back in 2010. However, it isn’t clear that sale would have gone through once the various parties involved had kicked the tires. In any event, I doubt even Frank Stronach would want to buy the company without huge union concessions. Several decades ago I asked him why all of his plants were small. His response, “I can easily shut them down if they become unionized.”

    • 0 avatar

      Long before the turn of the millennium, executives at European carmakers predicted a European new car boom after the turn of the millennium. They predicted a creeping erosion of the bread and butter segments right around now, they even predicted, 16 years ago, the strange resilience of the premium segments which we still see today. They also predicted an impending crash of the European new car market, which will “take us back to the bad days of the 90s.”

      I had a little hand in these predictions and have dated proof. These predictions were not based on reading tea leaves. They were based on population studies. The European new car markets will shrink dramatically, simply because there are dramatically fewer customers. What we see now is just the beginning. I recommend a look at population studies to any auto executive.

      Car executives who could read knew that total dependance on the European market means suicide, witness Opel, PSA, Fiat. Executives who could read expanded to other markets. Executives who kept Opel locked into Europe wrote its death sentence. I can understand that Opel workers have no sympathy for the plight of a GM that put them out to die. They will drain those resources from the parent company as long as they can, and knowing German law, the bloodletting will be massive.

      I am not surprised that at car company that does not think beyond the next quarter ignored these. Even in a company that usually has a much longer horizon, we were not really popular when we predicted utter doom in Europe for the period after 2020.

      The EU auto business is not in trouble because of the recession. There is a recession because suddenly, there are not enough buyers. It will get worse.

      I think I just wrote the beginning of another Automortal Sins chapter.

      • 0 avatar
        prthug

        Selling Opel was the only chance for either party to salvage something from the relationship. With GM’s global interests always in view, Opel has no ability to grow or export…and there’s simply no way for GM to spend what is necessary to down-size it to a profitable level. The bottom line is that not selling Opel to Magna was a massive mistake with implications that will be felt for decades to come. Fritz knew exactly why Opel had to be sold and why all the viability plans to keep it would never work. The fact that Girsky was the lone factor in convincing the Board to reverse direction, creating the present crisis, should be coming back to him in spades. Instead, Girsky is going to make millions while essentially setting the footings of destruction. Does this all sound familiar?? Those too arrogant to learn from the past only stand to repeat it.

      • 0 avatar
        Type57SC

        That sounds like some impressive predictive ability. I’d love to hear more.

        On the “opel locked in EU” thing – I don’t get it. Opel is basically GM Europe, and they have exported cars from time to time, although at prohibitive cost probably, and have likely imported cars from other regions too. So saying that Opel is EU locked is kind of like saying that Toyota Motor North America is locking in North America and forbidden to compete with Toyota in other regions. Help me understand what I’m missing here.

      • 0 avatar
        Athos Nobile

        @Type57SC

        Until not long ago, Opel seemed to be GM’s main small cars source. Even if they weren’t always exported from EU, there was local assembly via localization or CKD kits. That doesn’t seem to be the case anymore, the small car source is located somewhere else. The platforms however, continue to come from Germany.

        Bertel, that was brilliant. I googled a tiny tiny bit and oh dear, Europe seems to be in for some serious deep 5h1t as the century advances.

  • avatar
    analoca

    Discussing whether GM should sell or not Opel attracts a lot of attention but leads to no conclusion since it is clear that GM will not sell Opel, simply because it cannot accept to lose some 5%-6% share of the European market, which although in dire straits, does still represent some few million of cars per year. Only way forward for GM is to make Opel profitable, and it can be done if they have the guts to do it: Just adapt capacity to demand by closing some plants (more than one!) thus reducing manufacturing presence in expensive Germany and keep developing and launching good products, since Opel has the know how to do, as demonstrated by recent products such as Insignia, Astra and Adam…If demand return (not probable over the short term), GM has flexible plants in other European places ready to increase capacity.

    • 0 avatar
      Lorenzo

      Read Bertel’s next-to-last paragraph, and click the link he provided. Girsky is angling toward an Opel bankruptcy, which he apparently believes is preferable to selling Opel to a potential Russian-financed future competitor. The ducking and weaving going on is all part of the plan; whether it works or not is another question entirely.

      • 0 avatar
        Pch101

        “Girsky is angling toward an Opel bankruptcy, which he apparently believes is preferable to selling Opel to a potential Russian-financed future competitor.”

        Opel owes GM about 2.5 billion euro. That loan is coming due in 2014.

        It’s pretty obvious what’s going on here. Opel is being turned into a shell with a bunch of German liabilities and no assets. Meanwhile, GM’s ability to call or extend the loan gives it the power to pull a trigger on a bankruptcy based upon GM’s priorities and timetable.

        If GM can’t put a deal together with PSA, then it seems that the logical alternative is to use bankruptcy to move Opel’s or GM’s other production operations away from Germany. Given the union situation, the easiest way to deal with Opel is to relocate it by liquidating the existing Opel and replacing it with a new one.

      • 0 avatar
        Onus

        I couldn’t agree more. Didn’t gm already transfer some of Opel’s assets back to corporate. It obvious to see what they are doing as said above. They will bankrupt opel. Saves them money i guess the figure. It’s dirty non the less.

  • avatar
    -Cole-

    “GM is demanding that Opel staff wages in Germany be frozen until the unit returns to profit.”

    Kill yourself, Girsky.

  • avatar
    olddavid

    Not again?!? What the hell do they do at GM, promote based on the Peter Principle?


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