By on March 22, 2012

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.


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20 Comments on “GM Calculations: Plant Closures At Opel Will Take A Lot of Time And A Lot Of Money...”

  • avatar

    Should’ve sold to Magna when you had the chance.

  • avatar

    So they cant even have a plant shut down for say a month like they do here in the US? wow.

  • avatar

    Maybe they can covert that plant to sewing machine and bicycle production :)

  • avatar

    Amputation hurts, too, but it’s only done to save the patient.

  • avatar

    It would be interesting to know what GM’s goals are. Making money producing vehicles doesn’t seem to be one of them.

  • avatar

    Pure speculation on my part but I really wouldn’t be surprised if JLR offer to take on Ellesmere port. JLR desperately need capacity in the Uk and Ellesmere port is GM Europes most efficient plant….

  • avatar

    Will closing two plants be enough by 2015 when market share and overall sales could well be much lower than it is today? Reminds me of the too-little, too-late approach to North American plant closures GM took in the 90s. A better approach might be to have Opel “sell” the Epsilon and Delta architectures to GM North America for, say, $3B. Then, hand over the Opel keys to the German government. There is only money to be lost at this point.

  • avatar

    Girsky is there to eliminate European jobs just like the American operations, he is a liar and an evil man.

  • avatar

    It’s a shame that the Ellesmere Plant, GM’s most efficient in Europe is a candidate for closure due to labor laws in Germany. What will this do to Vauxhall sales?

    The US bankruptcy brought on painful restructuring, plant closures and new labor accords to get their money losing operations in NA to profitability. A similar purge is needed in Europe but they picked the wrong plant to close. Is the plan to use some of Peugeot’s excess capacity once the EU economy rebounds? If not they are going to be paying a lot to reopen these plants.

    • 0 avatar

      It makes no sense to close Ellesmere Port if it the most efficient. No sense to most business people anyway. Close the good bit because of the bad???

      But this is GM topic after all, a company successful in losing money. Did it in spectacular fashion for years before CH11. Maybe it’s rolling out the same plan again?

  • avatar

    You’d think it would be really good marketing to ramp up production in Germany with inexpensive Chinese modules – I’d think you could sell “German-made” cars for a premium. I know I specifically bought one of the 2011 German made Buick Regals rather than a North American made one even though they’re probably made of the same parts.

  • avatar

    Well of course Friedrich Stracke wants to honor this contract – he doesn’t want to be singled out. A lengthy lockout engineered by the legal dept would save on wages & pensions. If anybody gets a golden handshake it’ll be Stracke & co.

  • avatar

    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!”

  • avatar

    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.

  • avatar

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

  • avatar

    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.

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