Opel Labor Leader Threatens Mother Of All Plant Closures
“This would be the most expensive plant closure of all times,” warned Rainer Einenkel, chief of Opel’s works council and Vice Chairman of its supervisory board. “This would cost GM billions,” Einenkel said today at a news conference following a staff meeting in Bochum. “Opel would not survive this.”
A few days ago, Germany’s motor mouth Ferdinand Dudenhöffer had painted a semi-rosy picture. Sure, paying each employee $200,000 as severance would hurt. But closing Bochum would save around $280 million a year, three years later, the investment would be paid back, Dudenhöffer argued. Payback would not happen until 2018, closures are only possible starting in 2015.
Dudenhöffer and GM management are dreaming, says Einenkel. There are no 3,200 workers, but 5,000. Some 1,800 are loaned to partner companies, but have a contract in Bochum. Workers “won’t go voluntarily,” Einenkel told Reuters, signaling costly fights in the courts. The Bochum plant sits on top of former coalmines, no investor will buy the plant, fearing uncontrollable environmental cleanup costs. Closing Bochum could also severely damage Opel’s brand, Einenkel said.
Before that happens, Opel will severely damage GM earnings , for many years.
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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So the first big decision of the "new and improved" GM Board of Directors was to stop the sale of Opel because it was such a bad idea. Seems shareholders are out about $2 billion at this point...and the "new and improved" GM leadership team is going to show the simpletons who came before how to get a deal done. Hmmm. How's that workin' for ya now? Wonder if we’re going to see all that accountability of leadership that was supposedly lacking with the old BOD? Girsky and Akerson have put GM into the mother of all quagmires and they're not going to get out. Magna was ready to take this dud and GM would have been pretty much out of this nightmare. Instead, Opel will remain in the same vice it's been in for decades...it's got more than twice the capacity it needs, the entire industry is aligned against it politically because killing Opel is seen as the best way to bring capacity down in Europe, and as the post here makes clear, you ain't closing any plants in Germany without paying billions. I suppose the new geniuses running GM will protest that the economic recession that Europe is heading into was unforeseen. Of course, that excuse worked great for Wagoner and Henderson (not). This is the single biggest drag on GM's stock price and thus the ability to pay back the American public. Akerson and Girsky have failed miserably in their very first test of leadership. And yes, that's the sound of crickets chirping you hear from the GM Boardroom as the new group of bystanders watches helplessly.
There are no simple solutions. Maybe GM might have been better off with a full-blown, world-wide bankruptcy (WWB1) this would have given them ability to walk away from all their quagmires. The US Federal bail-out flipped them a few tens of billions but left the euro-swamp un-drained. Some posters say that Open can simply be folded, but I don't think this is the case. For worse or for worse, GM itself is directly linked. Trying to fold Opel is prob'ly like trying to say that GM pension system would die with Pontiac. I'm sure people much smarter than me, and with much greater legal and accounting knowledge have looked at the options. What might be missing for the closure option is courage: what executive would want to take this hit when you can simple kick the can down the road? This is like pulling off a band-aid so large it rips your arm off. BTY regarding "european" comments about Americans: you are right, all Americans stereotype every single last one of them. Including me.
Here's a simple solution: sell Bochum to Audi or BMW for one Euro. Both companies could probably use the extra capacity. GM could then contract with the new owner to buy Astras and Zafiras for a set period of time. The plant remains open and German. Everyone is happy.
Vice-president Rainer von Ribbentrop blowing.. brakes need be applied slowly. GM needs to go to Washington and get some external pressure on Merkel.