Opel Going Nowhere Fast

by Bertel Schmitt

Published: February 2nd, 2010

Opel is running out of time and out of money. In the second quarter of 2010, the company will be out of cash again, figures the German Handelsblatt. As indicated yesterday, discussions with the unions are going nowhere. Says the Handelsblatt:”Management is preparing for a breakdown of the talks.” Reilly and his crew are trying to find ways how to get Opel going without wage concessions by the unions. But how?GM does not want to contribute any money, said works council members to the Handelsblatt. Remains government help. However, peace with the workers, and a considerable contribution by GM are preconditions for any government help, is the word from Berlin. The relations with the workers are heading towards war. Members of the Opel Supervisory council, such as union leader Armin Schild are against state aid. As long as the unions are battling with Opel management, propping up Opel management with tax payers’ money is no smart political move. Music in the ears of economy minister Brüderle, who also is against pouring money down a black hole. This is going nowhere fast.

#BertelSchmitt #Germany #Opel #Reilly #Unions

Bertel Schmitt

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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Cjpistonsfan on Feb 02, 2010

My family lived in Germany for 5 years (1996-2001)while my dad (a ~30 year GM employee) worked on assignment for Opel. I once asked him how Opel could be having financial problems (back then they were, too) when I could see lots Opels on the road literally everywhere I went. His response: "When a company sells a product for less than it costs to make it, that company is going to have financial problems." Such a simple truth that it is astoundingly little-heeded.

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- OldandSlow on Feb 02, 2010
  
  Your dad's response pretty much sums it up. - and - restructuring will cost money as well. Redundancies/lay-offs don't come cheap in Europe. Does Opel/Vauxhall really need two plants, one in Bochum and another Ellesmere Port to produce the Astra?
  
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Dr Strangelove on Feb 02, 2010

"GM had the opportunity to turn Opel-Saab into the next VW-Audi but miserably failed...again" GM has owned Opel since the second crusade. In the fifties, Opel could sell cars that competed with Mercedes; into the seventies, their standing as a brand was still ahead of VW and Ford. Falling behind these two competitors really shows how poorly they have been managed. This disaster has been long in the making; it parallels GM's slow but thorough decline in North America.

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- Rob Finfrock on Feb 02, 2010
  
  Indeed, Strangelove... and both are even more closely related today, of course, as the only halfway decent products Gov't Motors US can claim are based directly on Opels. Doesn't bode well for Whitacre & Co.
  
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Steven02 on Feb 02, 2010

In the end, I think the union is stalling. If Opel goes under, they are going to be out of a job. I guess that is ok in Europe, with all the entitlements they like to hand out.

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- Pnnyj on Feb 02, 2010
  
  The union seems to be operating under the very realistic belief that under GM's incompetent management Opel will go under regardless of whether they make concessions or not. Unless GM comes up with a solid, legitimate plan for the long term success of Opel or GM sells the company the workers have nothing to gain from making concessions. So far all of GM's various plans for Opel have been merely delaying tactics to avoid bankruptcy for a couple of years using money borrowed from governments. That's not a plan for long term survival, let alone long term success.
  
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- Steven02 on Feb 02, 2010
  
  Opel isn't being run by the same chiefs anymore. New plans have been proposed. The big part of the plans that the union doesn't like is the job cuts and concessions (go figure). One must get costs under control for any hope of survival, which is what Opel is proposing (and very similar to the Magna plan the unions were on board with). The plans for loans for restructuring are typical. Ford did it when it was restructuring. Ford had the benefit of getting the loans before the credit crisis. No one would do that today, for Ford or Opel. Ford is doing better today because of those loans it took. Saying loans for restructuring is a stall tactic is incorrect. Restructuring is expensive and is required for long term survival and success (why do you think Magna wanted a large amount of loans as well).
  
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1 Liter on Sep 17, 2010

I hope they're able to pull through, I've always like Opel. The new Ampera looks pretty sweet, much nicer curves than the Volt.

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