GM Calculations: Plant Closures At Opel Will Take A Lot of Time And A Lot Of Money

Bertel Schmitt
by Bertel Schmitt
gm calculations plant closures at opel will take a lot of time and a lot of money

Looking for a way to stop the chronic bleeding of money at it notoriously loss-making Opel division, GM has been crunching numbers to see what it would cost to close one of its European plants. Bad news for GM stockholders: Relief won’t come cheap, and it won’t come soon.

Shuttering one of the plants, along with the legally mandated golden parachutes, will cost €1.5 billion, or $2 billion, Germany’s Handelsblatt learned from sources at GM. Prime candidates for a cull are the usual suspects: Ellesmere Port and Bochum. No decision has been made.

Addressing the capacity glut will not only cost money, it will take time. GM has an agreement with the unions that forbids plant closures or firings until the end of 2014. Opel chief Karl-Friedrich Stracke wants to honor this contract. Breaking it would cost much more than the $2 billion.

The way it looks, Opel will lose money at least through 2015, with a huge loss when the plant will be closed. Until this happens, productivity and moral can be expected to deteriorate.

Join the conversation
4 of 20 comments
  • CRConrad CRConrad on Mar 23, 2012

    It won't be Bochum, because that's politically impossible: Nokia closed its factory there a few years ago, so there'd be too much of a hue and cry about "Not us again!"

  • Conslaw Conslaw on Mar 23, 2012

    Given how much they would have to pay to shut down, I think maybe they should give some thought to producing something other than cars atthose plants. They could probably get some German government funding to produce home fuel cells, for example.

  • Herm Herm on Mar 23, 2012

    could they sell some plants to the Chinese?.. they have cash

  • Robbie Robbie on Mar 24, 2012

    It is pretty obvious now that GM is essentially cooking the books to get the European unions to cooperate with plant closings and workforce and salary reductions. Opel's research and engineering - most of GM's international offerings are Opels - probably features for an amount of 0 in the bookkeeping balance.