By on May 20, 2010


The Euro and the UK Pound go into a tailspin. Greece requires a bailout. Spain & Portugal could be next on the default list. The economy is in tatters. The car market is shrinking. The government announces spending cuts, on top of people’s reluctance to spend. On this dire backdrop, does it surprise you that workers at the Vauxhall plants (they’re actually Opel plants re-badged “Vauxhall”) have chosen to accept a pay freeze in return for job security? The Times of the UK reports that the 3200+ workers located in the UK are close to agreeing to a 2 year pay freeze. Union officials in the UK believe that the pay freeze is an acceptable hit to take in return for job security. They also believe that when it comes to the union vote, it will be passed through with little complaints. There is of course one slight flaw in the plan….

Opel’s Nick Reilly says that wage concessions to the tune of €265m a year are essential for Opel’s survival. Try as we might, the UK cannot bear the brunt of all of that, which means our European friends need to help out. The UK already has 500 Opel employees on the dole . Opel workers in Antwerp, Belgium made the ultimate sacrifice, albeit not completely voluntary. At an average severance pay of $205,000 per job, it was a bearable sacrifice.

That leaves Spain and Germany to help Opel out. Spain has already agreed to cut 900 jobs and since the Zaragoza plant in Spain is the largest GM plant in Europe and is efficiently run, GM will be at pains to make any more cuts there. Which leaves Germany. Germany has agreed to cut 4000 jobs, which means any more concessions will be unlikely. But despite all of this, Opel management say they’re close to a deal with European trade unions on concessions. Oh I forgot, there’s an even bigger problem. All of this restructuring will need to be financed by someone. Germany have said “nein”, the UK said “only if Germany is involved” (and that’s providing, the Centre-Right government won’t cut the funding completely.) RenCen will find it difficult trying to convince the US government to use US taxpayer money to bailout their European operations.

Suddenly, that job security doesn’t look worth the paper it’s printed on.

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7 Comments on “Fauxhall: Workers Trade Pay Freeze For Job Security...”


  • avatar
    Geo. Levecque

    If you all note there was a change in Government in the United Kingdom, I can’t see this new Government giving any Money to anyone, in fact they are planning to cut, on June 22nd all will be shown in there Budget!

  • avatar
    Stingray

    “RenCen will find it difficult trying to convince the US government to use US taxpayer money to bailout their European operations”

    They’ll have to convince and they will have to agree. Period. Or it’s time to see themselves in Chrysler’s mirror in the 70’s. Losing both, manufacturing and engineering capabilities in EU will hurt them badly.

    Also, I don’t think the excess capacity Europe is suffering must be charged on a single manufacturer. All of them are “guilty”, and hence should rightsize.

  • avatar

    With every bit of bad new coming out of Europe, any help for Opel becomes less likely. Under the current circumstances, a bailout would cause riots in Germany.

    • 0 avatar
      Stingray

      I would say in any country that gives a bailout to GM.

      I don’t think ANY EU country is going to help them. And this is why GM should step in and help its European subsidiary. To my point of view it’s an strategic asset and I wouldn’t let it go down.

  • avatar
    PeriSoft

    We’re Backing Luton

    …as opposed to Brawn Grand Prix, who are lacking Button.

    I’ll be here all week. Tip your waitress.

  • avatar
    joeaverage

    $205K severance??? Pay off your mortgage and get something else.

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