Opel Has A Plan. Looks Pretty Rotten
Opel’s Nick Reilly today revealed details of Opel’s long-awaited business plan. Here are the highlights (and low points) as reported by Automobilwoche [sub].
- 8300 jobs in Europe will be lost. 7000 of them blue collar, 1300 white collar. 50 percent of them in Germany. Belgium will lose 2,377 jobs, Spain 900 jobs, more than 500 are slated to be cut in Britain.
- Antwerp will be closed.
- Production of transmissions in Bochum (1,800 jobs) and Rüsselsheim (862 jobs) will be stopped and “partially” moved to other Opel plants.
- Production capacity of Opel will be reduced by 20 percent.
- Eisenach, which was on the list of endangered species, will lose only 300 jobs.
- By 2014, Opel wants to have renewed 80 percent of its portfolio of cars. 2010 will see 8 new product launches, amongst them the Meriva, Corsa, Movano and Astra Sports Tourer. Four more will follow in 2011.
- Until 2014, Opel wants to invest €11b into new development, especially into alternative power trains. Apart from the previously announced Volt-clone Ampera there will be another range-extended vehicle and some smaller pure plug-ins.
- Opel is seeking €2.7b in government support. €1.5b of the aid is supposed to come from Germany, reports the Frankfurter Allgemeine Zeitung.
- The restructuring plan requires €3.3b. Of this, GM has already paid $600m. Furthermore, GM has prepaid €650m for engineering work, reports the Swiss magazine Cash. Translation: GM won’t sink another dime into Opel. Possibly, they want some money back.
- According to the plan, Opel will stop losing money in 2011, and will start making money in 2012.
This plan, especially the last point, will receive heavy scrutiny in the next days and weeks. One tough question that will be asked: Where does Opel want to find the €11b for new investments if the severance package for the fired workers will eat up most of the €2.7 in government aid – if there will be any or enough government aid?
German Economy Minister Rainer Brüderle and British Business Minister Peter Mandelson had said at a joint press conference last Friday that they would “carefully consider” any appeal for aid immediately after a business plan had been presented. German politicians are on record that they want GM to put “a lot of money”on the table before state aid would be considered. That money is nowhere to be found in the plan presented. The unions have already said that they vehemently oppose Reilly’s plan.
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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8000 jobs, half in Germany? If Opel goes under it probably saves 8000 jobs, all at other German car makers. Why give them a single Euro? The GM business plan is to get engineering from Opel to sell cars in China so the UAW can keep collecting benefits while sitting on their arse. Plus a few flowers, smoke and mirrors.
- This is not a business plan, it is a list of talking points offering political cover to the Europeans if they agree to throw money at Opel. - The €11b is not in the plan because the Democrats are on the skids back home, and the US public does not want to hear that Government Motors is going to suck up yet more of their tax dollars. On the other hand, the US public also doesn't want to hear that a major chunk of GM, a company they bailed out with previously unthinkable sums, is being closed down (with massive dissolution costs, to boot). That's why the Europeans have Washington/GM over a barrel. I hope we see more of these clearsighted articles about Opel from Herr Schmitt, partly because the price tag associated with creating a new line of competitive vehicles there ought to put to rest the notion that GM kept Opel by choice. The cost makes it clear why GM couldn't get rid of this albatross before, and is sweating to find government partners now. Washington/GM is not in the driver's seat, and the hardballing Europeans know it.