Labor To GM: Talk To Me!
Leaked plans of GM doing the math on plant closures at Opel enrage Opel’s labor leaders. They already had been miffed by GM’s unwillingness to come to the negotiating table. Now they feel blindsided by math by math exercises at GM that involve the closure of Opel’s Bochum plant, the plant in Ellesmere Port, or both.
Opel-Vauxhall labor leaders told Reuters that they “demand that management clearly reject the public speculation (over plant closures) and agrees to hold immediate constructive internal talks in order to prevent further damage to Opel/Vauxhall.”
Opel sits on excess capacity equivalent to the output of two plants. Unions want GM vehicles imported to Europe to be built here to ward off plant closures. The unions say it’s a deal. The alternative would be huge legally mandated severance packages. GM’s calculations showed that closure of one plant could cost $2 billion.
The union doesn't seem to realize they are whistling past the graveyard. Just read American Icon, and the UAW, to it's credit realized that they couldn't afford to whistle past the Ford graveyard anymore lest they would go "poof" about 1 second after Ford did, or after Ford began moving production to Mexico.
I spent a lot of time a few months ago googling German bankruptcy law, after commenters here thought GM should just close Opel to stem losses. Apparently, German bankruptcy law is really heavy-duty. Forget all the Euro-specific laws -- you do not want to go bankrupt in Germany, either as a private citizen or a company, and that would be the only way to escape paying severances for a company like GM. There are many stories about Germans going to live in the UK, and going bankrupt there rather than at home, because it's all over in a few months rather than years and years. Then there are large German companies who relocate their head offices to Britain, so that they can go bankrupt in relative peace. GM Europe is headquartered in Switzerland, but they have companies registered in every country, so no doubt would run afoul of German law. The other things that Germany insists on is that a company has to tell the government when they just begin to have income less than their outgoing, because that would be a prelude to bankruptcy. Germany is different from just about everywhere else in this requirement, I'm led to believe. I'd love to hear a bit more from someone who really knows about German bankruptcy law. From what I read about Girsky roaring over to Germany back in the fall to sort out that darn Opel "unit" losing all that money, I'd bet a half-hour lecture from an expert on German bankruptcy law brought all his ranting to a quick stop. That's why 2015 will be the earliest they can deal with the union at Opel, and it could well be a messy affair. And, in addition, GM kind of burned their bridges behind them with the federal German government, back when cowboy Ed (I bite heads off snakes) Whitacre told Chancellor Merkel he was keeping Opel rather than selling to Magna. Yup GM, you have Opel as a noose round your neck for years to come just for being so big-headed. A pity, speaking as a (Canada 10%) GM shareholder.
Could GM be trying to soften up the unions prior to negotiations?
Whatever German laws are - German is prosperous country and largest exporter. It export high quality premium products desired all over the world. Now what US exports and what reputation US products have? American CEOs successfully destroyed and continues to destroy many companies and got away with huge bonuses and golden parachutes. So may be German unions participation prevents management from making stupid short term decisions, outsourcing and company value destruction. I understand pretty well why Opel despises GM and would be happy to do away with GM. How it happened that all other German auto companies have no problems except of Ford and GM? May be because they are not owned by foreign parents?