Opel: Steve Girsky Takes Off The Gloves. I'd Keep Them On, The Climate Will Be Icy

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.