GM's Axe Antagonizes Germany

Bertel Schmitt
by Bertel Schmitt
gm s axe antagonizes germany

Roland Koch, the premier of Opel’s home state Hesse is pissed. GM’s plans to cut 2,500 jobs there are “completely unacceptable.” Koch said that Nick Reilly had told him just 24 hours earlier that GM’s restructuring plan would “in principle” orient itself on job cuts agreed with Canada’s Magna.

We know what Reilly will say. The Magna plans called for 10,000 cut jobs all over Europe, GM wants to cut only 9000, so “in principle” that’s a better deal. Except for the Germans.

“Germany takes brunt of Opel job cuts” headlines Reuters. Which isn’t entirely true. According to just released numbers, Opel employs 48,000 people all over Europe. 24,300 of those are (were?) in Germany. GM, being an equal opportunity unemployer, will axe 4500 to 5000 Opel jobs in Germany, out of the 9000 that will go poof all over Europe. So from a European perspective, it’s about even Steven. In principle. Koch and his colleagues are under the – surely misguided – impression that the job cuts are payback for GM having to pay back the bridge loan, and for Germany being stand-offish as far as aid goes.

Opel’s top labor leader Klaus Franz detailed GM’s chopping schedule to Automotive News [sub]:

Rüsselsheim, Germany: Nearly 2,500 jobs at Opel’s headquarters to go — 1,300 in administration, 862 in production, 548 in engineering and development center.

Bochum, Germany – 1,799 jobs to go.

Eisenach, Germany – The Corsa three-door plant would lose 300 jobs.

Kaiserslautern, Germany – The powertrain plant would also lose 300 jobs.

Zaragoza, Spain – The Corsa five-door and Meriva plant would see losses of 900 jobs.

Luton, England – The light commercial vehicle plant, which builds Renault Trafic and Opel Vivaro vans, would see 354 jobs eliminated.

Ellesmere Port, England – No jobs at risk at the main Astra plant.

Gliwice, Poland – No jobs at risk.

Szentgotthard, Hungary – No jobs at risk in powertrain plant.

Aspern, Austria – No jobs at risk in powertrain plant near Vienna.

Antwerp, Belgium: GM has not yet decided the fate of the plant, which employs 2,321 workers. If it closes the plant, all workers will go. If GM decides to build a small SUV there, as agreed in April 2008, then only 750 jobs would be cut.

What’s wrong with that picture? Reilly was naive enough to boast to Reuters that “he was optimistic about prospects for getting both labor concessions as well as state aid from countries with Opel plants, which also include Britain, Spain and Poland.” The list above agrees with that statement. Reilly is supposed to know that any aid-for-jobs is highly verboten under EU law. Brussel’s fines can be very steep. Sure, Microsoft could pay their €1.35b penalty out of two weeks of free cash flow. GM is in the poorhouse. If GM has to pay (a most likely higher) fine AND return the money received, Opel will be done. Antagonizing the German government might not be the best idea. Reilly should know from his days in China that a government can make the life of an automaker paradise or miserable, any way you want it.

Speaking of Brussels, the head of the regional Flanders government, Kris Peeters, also is fuming at GM: “I am not very happy at all that there is a confusion of information, no clarification, and they always say something negative about Antwerp. I don’t like it at all.”

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  • Wmba Wmba on Nov 27, 2009

    I like your wry comments, Bertel. In the land of what-ifs -- if Whitacre had kept his nose out of things and let Henderson tell Merkel gently about GM's change of mind, instead of rubbing her nose in it; if Whitacre had kept his mouth shut about GM being able to rescue Opel alone, then the cracks could probably have been pasted over quietly, with German government money. But he didn't, and this horror show will go on for a while. - unless the Europeans collectively accept that the overcapacity in the region could end with Opel's demise, and refuse to help at all, sending the whole show to bankruptcy. Opel's manufacturing capacity is not needed in Europe or worldwide. There are only local reasons (those plants listed in the story) for keeping the enterprise going.

  • BR BR on Nov 30, 2009
    "Antagonizing the German government might not be the best idea." Bingo! That's what worries me - the effect that this will have on our relationship with the Germans. My uncle from Heidelberg was in town for Thanksgiving. He's been living there for 20 years now. I asked him about how this debacle was playing out in Germany, and he replied, "They [Germans] feel duped, and the sentiment is 'America is not to be trusted'." I think we're going to feel the sting from this one for quite some time. BR
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