Reuters Report: GM Plans To Shift Chevy Jobs From Korea To Europe To Save Opel
When thinking about creating cost efficiencies, moving jobs to Asia usually comes to mind. GM has a different plan to bring profitability back to its hemorrhaging Opel unit. GM is considering bringing Chevrolet production from its Korean plants to Europe. In exchange for delivering jobs, GM expects concessions from the unions that would clear the way for a major cost-cutting operation necessary to stop the bleeding and to save the German patient from otherwise certain death. This is at the heart of a detailed report just filed by Reuters correspondents Christiaan Hetzner in Frankfurt and Ben Klayman in Detroit.
Says Reuters:
“One idea would be shifting production of the high-volume Chevy Cruze small car to Gliwice, Poland, and then swapping production from that Opel plant to others in Western Europe, according to the sources, who asked not to be identified discussing union strategy.”
“Another part of the proposal under discussion would bring output of the seven-passenger Chevy Orlando crossover to the Bochum, Germany, plant, the sources said. Bochum has long been considered the Opel plant most likely to be closed.”
According to the report, the two parties appear to be close to agreement. A lot of the information from Germany originated from “people close to the leadership of German union IG Metall,” as the report says.
There is not much time left. GM wants to have a clear strategy for Opel by the end of March, Reuters learned. GM CEO Dan Akerson is getting increasingly disgusted by the flow of red. Plans to take Opel bankrupt appear to be off the table, at l;east for now and until needed in the game of carrot & stick.
On Tuesday, Akerson told Reuters in Detroit:
“In Europe, I don’t think they have a Chapter 11 option. I know it’s not the same set-up as here. That being said, we’re working hard in Europe. We’re going to try to scale our production with the market opportunity.”
In 2011, GM exported approximately 250,000 vehicles from South Korea to Europe. If the deal goes through, jobs instead of cars will be exported to Europe. Let’s see what the militant South Korean unions have to say about that.
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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I think this is a very good descision! Opel is actually more important in terms of R&D capacities than Daewoo in South Korea. As Opel was denied by GM to enter certain markets in favour of the Chevy brand this seems like a fair deal. After all the Opel Mokka and the Opel Antara are built by Daewoo. So why shouldn't it be the other way round this time? Also the Cruze is selling quite well in Eastern Europe ... a production there could even boost sales.
This may just be the equivalent of Gillette, which gives the shaver away and makes a killing on the razor blades, blaming the shaver division for its losses. I suspect this is all posturing on the part of GM, in order to get concessions from the German unions. By not giving Opel credit for developing cars and platforms other than for its Europe sales - and not allowing it to be present in many markets - obviously GM can create a loss in the books for Opel.