By on March 22, 2013

GM has a huge problem in Bochum – or an unexpected opportunity.  Workers at Opel’s Bochum plant yesterday refused a restructuring plan that would guarantee auto production in Bochum through 2016, and that would keep the plant making components after that. GM answered on the same day:  ”Production of the Zafira Tourer and  the waiver of enforced redundancy will end after 2014.” This would open the door to closing the doors in Bochum.

It also could become extremely costly for GM.

After other Opel plants had voted to accept the restructuring plan, workers at Bochum rejected the proposal yesterday with 76.1 percent of the votes,  Automobilwoche [sub] says.

Currently, there is a contract that keeps jobs safe and plants open through 2014. The restructuring plan would have extended the production of the Zafira through 2016. After 2016, Bochum would have been used for component manufacturing and a parts depot, employing 1,200 workers. Currently, 3,900 people work in Bochum. This number can now be reduced to 420.

What sounds like a win for Girsky & Co. can become a huge drain on GM’s profits. According to German law, GM can close the Bochum plant, however, it would have to offer jobs at other German plants.  If Opel wants to get rid of workers and payroll, it must negotiate a restructuring plan with the works council. That failed yesterday. If there is no plan, and  if  the works council opposes, fired workers  can and will sue Opel. The severance payments will then be determined in court. This mean s huge exposure for a large company with deep pockets and few friends in Germany.

Assuming an average negotiated severance payment of $200,000 per worker (using  Opel’s Antwerp and Ford’s Genk plant as examples), a good negotiated deal with a cooperative works council would cost GM upwards of $700 million. In an adversarial situation, this number could quickly snowball to several billions. A few weeks ago, Bochum works council chief Einenkel  promised “the most expensive plant closure of all times.” He said it “ would cost GM billions,” and that “Opel would not survive this.”

It looks like the Bochum workers have written off Opel and want to get out for as much money as possible. In their situation, I would do the same.

The refusal of Bochum’s workers also signals troubles with the IG Metall union. The Bochum works council had been increasingly at odds with the unions.

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19 Comments on “Opel’s Bochum Workers Reject Deal, Prepare For Costly Battle...”


  • avatar
    cc1982

    “this number could quickly snowball into several billions.”

    Billions? Really? Several? Come on. This is 3,200 workers. Also, the rest of the German facilities agreed to the plan, so GM has actually done a great job here splitting IG Metall in this case.

    Good example of a union shooting themselves in the foot. They got a (too) generous deal from GM, and voted it down because of the emotions of one member of leadership. Now, GM gets to shut down the plant and fire everyone, and sure, severance will be expensive — but at $300m operating loss for the plant they make the severance back up in 2 years. Solid return. And, in court they can demonstrate that they put a very compelling deal on the table, so they should be able to push severance numbers even lower than Ford at Genk (for example). Basically an unexpected windfall for Opel here.

  • avatar
    lowsodium

    I read that 200k per worker 5 times in the last few articles and still cant wrap my head around that insane amount. I felt my wifes company was overly generous with a 10k amount.

  • avatar
    schmitt trigger

    And then they wonder, how come no new manufacturing plants are being built in Western Europe.

  • avatar
    gslippy

    Spend the money, close the plant, be done with it. GM is just ripping the Band-Aid slowly.

    • 0 avatar
      OldandSlow

      +1 Exactly what I was thinking.

      • 0 avatar
        mike978

        Exactly, that has been advocated for a long time. It is costly for GM whatever they do. So spend the $2.5 billion and close three factories as necessary – not just Bochum. Follow Fords example, and that money is made back within a few years. Plus don`t they have the cash reserves to do this?

  • avatar
    tenzin

    Hmm, the person is holding up a sign of a fist with 6 fingers.

    • 0 avatar
      Summicron

      I was riding through Janesville, WI one day with my boss, getting a tour of our local service district, and I noticed several large fields on the outskirts of town with huge dark green tarps propped about 3′ off the ground.
      I asked boss-man, “What do they grow under those?”
      He answered, “GM workers”.

      Maybe these guys just drew what they saw at the end of their wrists.

  • avatar
    doctor olds

    Six hundred forty million is chicken feed in the car business.

    One annual Chevrolet sponsorship contract, for example.

    US workers have been offered $145K in the recent past.

    The $200K number seems realistic for Deutschland.

    • 0 avatar
      th009

      Agreed. If paying $1B can make a serious dent into GM’s $1B/year annual losses in Europe, it’s time to pull the plug.

      And from a PR perspective, GM has made a reasonable offer, and the unions have rejected. Pay the piper, shut down the plant and focus production in Eisenach (a relatively new plant in Eastern Germany), Kaiserslautern and Rüsselsheim. GM has the cash, and this will make the European operations much healthier.

  • avatar
    kars

    good observation tenzin, no wonder the cars were unreliable

  • avatar
    Onus

    That poster has one extra finger.

    I wonder if the protestor knows how to count?

    Anyway sounds like they should just shut the plant down now.

  • avatar
    OldandSlow

    “It looks like the Bochum workers have written off Opel and want to get out for as much money as possible. In their situation, I would do the same.”

    So, it you can’t keep a job with said company – then the worker buy out should be so expensive as to insure that no one else will have a job with Opel either.

  • avatar
    ihatetrees

    Why didn’t GM sever the Opel limb when they had the bankruptcy chance a few years ago?

    • 0 avatar
      28-Cars-Later

      What is “Follies by the GM Board of Directors” for $400, Alex.

      “The decision to keep Opel is another example of the aggressive approach of G.M.’s board, a majority of which was selected by the Obama administration.”

      So there’s that too.

      http://www.nytimes DOT com/2009/11/04/business/global/04gm.html?_r=0

  • avatar
    amca

    “A few weeks ago, Bochum works council chief Einenkel promised “the most expensive plant closure of all times.” He said it “ would cost GM billions,” and that “Opel would not survive this.”

    Well, that’s a constructive attitude. Employ us, or we kill you. In which case we, and a bunch of us also are unemployed.

    Brilliant!

    • 0 avatar
      Lorenzo

      It sounds like he’s daring GM to declare Opel bankrupt. If it’s true that everything worth keeping has already been transferred to other GM entities, that’s a dumb thing to do, unless he and his union have something up their sleeves. Somehow I think we’ll be looking at another long-running soap opera, one that may top the VW-Porsche miniseries that Bertel declined to turn into a NYT list #1 best seller. Bertel, keep a book outline in mind as you cover this, and assemble copious notes. I’m determined to make you a world-famous author, so don’t fight it this time.


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