Opel Sends Workers Home

GM’s troubled German daughter will close its main factory in Rüsselsheim and its component plant in Kaiserslautern for a total of four weeks in response to a drop in demand for cars in Europe.

According to a Reuters report, Opel will halt production for a total of 20 working days between September and the end of the year. In a statement, Opel’s HR chief Holger Kimmes says:

“The European automobile market is declining dramatically. Now, shortened working hours are the correct measure to bridge the weakness of the market.”

As reported earlier, shortened hours (they can be shortened all the way to zero,) called “Kurzarbeit” (“short work”) in German, are a temporary measure that allows to react to insufficient demand. Workers can be sent home without or with reduced pay, they will receive unemployment benefits of up to 67 percent of their normal pay.

9,300 blue and white collar workers at Opel are affected.

Says Reuters:

“Now that it has the approval of the works’ council and labor union IG Metall for the plan, Opel can apply for subsidies under the German government’s short-work program, called “Kurzarbeit”.

The scheme was used by many struggling companies in the 2008-2009 recession, allowing them to preserve jobs by cutting employees’ hours when plant usage was low and having the government compensate workers for part of their lost wages.”

Germany’s Handelsblatt adds:

“An erratic course of the mothership GM and the crisis in Europe hollowed-out Opel’s foundations. Its market share sinks, creating huge problems with overcapacities. Several attempts at a restructuring failed. Two years ago, 8,000 jobs were slashed in Europe, the factory in Antwerp was closed. Nevertheless, losses in the Europe business piled up to more than half a billion dollars in the first half of the year. In the last ten year, GM lost more than $14 billion in Europe.”