This Is Your Brain On Drugs Dept.: GM Wants To Announce Opel Plant Closure To Prop Up Obama

Bertel Schmitt
by Bertel Schmitt

With their Washington overlords breathing down their necks, GM executives are pushing Opel for a definitive agreement to close Opel’s Bochum plant. According to the Wall Street Journal, GM “would like to be able to announce the plan before or along with its third-quarter earnings, which are expected to be disclosed Oct. 31.”

Keep smoking.

Says the Journal:

“The company, whose stock is languishing, would like to have an agreed-upon downsizing plan by then to signal to investors that it is moving aggressively to stem the financial losses at Opel.”

“Lifting the stock price ahead of November could have an impact on the presidential election that month. President Barack Obama backed a taxpayer funded bailout and bankruptcy restructuring of GM.”

Discounted by some commenters as a non-story, GM had bumped-up the date of its Q3 earnings announcement to occur before the November 6th election. Now, it needs good news to announce.

If GM plans to deliver the good news in a timely manner, it better get ready to pay a very high price. Plant closures and firings are contractually verboten at Opel through the end of 2014. Opel and its unions are in negotiations to extend this period through 2016. In that deal, the unions are supposed to agree to a delay of pay rises in exchange of two additional years of job security through 2016. According to Germany’s Automobil Produktion, this deal would save Opel between 40 and 50 million Euro yearly. Closing Bochum on the other hand could save GM $2 billion, Automobil Produktion says in a different article. Do you get a feeling for where the priorities are?

According to the same magazine, Opel’s works council chief Wolfgang Schäfer-Klug emphatically denies a report by Germany’s Frankfurter Allgemeine Zeitung that says that Opel is planning a reduction of 1,000 white collar jobs, 30 percent of the administrative workforce in Rüsselsheim. Opel needs a works council agreement for the plan, and it sounds like Opel won’t get it.

The unions are in an unassailable position. Jobs are secure through 2014, and can be made secure through 2016 if the unions forgo, or even defer a pay raise. After that, the ax will fall, workers will get up to $250,000 in severance, and then will be eligible for generous German unemployment benefits. It is doubtful that German metal workers will readily give up this position, only to advance Barack Obama’s odds in November. If they do, only for a very high price.

However, if you think that Opel will go on losing money just because Opel has lost money in the past 12 years, then GM’s head of European Operations, Steve Girsky, wants you to re-think that position.

Said Girsky to Bloomberg:

“You can’t have a mindset that it’s OK to lose a billion a year. That’s the mindset we’re trying to change.”

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2 of 27 comments
  • Oldyak Oldyak on Sep 14, 2012

    Yes to all the above...? The longer that G.M. survives on the government teat the poorer we will all be. OUR government GAVE Chrysler to Fiat but at least they are making a go of it.

  • Billfrombuckhead Billfrombuckhead on Sep 14, 2012

    Since the bailout almost a 1/3 of all cars old in the US have been from GM and Chrysler. What would the rest of the auto industry have done to their prices if they didn't have that competition? What about the value of customers cars? What about all the lost jobs and the implications of that? What about favoring foreign state socilaist competitors vs our own companies and people? "The poorer we will all be", hardly.

  • Namesakeone If you want a Thunderbird like your neighbor's 1990s model, this is not the car. This is a Fox-body car, which was produced as a Thunderbird from MY 1980 through 1988 (with styling revisions). The 1989-1997 car, like your neighbor's, was based on the much heavier (but with independent rear suspension) MN-15 chassis.
  • Inside Looking Out I watched only his Youtube channel. Had no idea that there is TV show too. But it is 8 years or more that I cut the cable and do not watch TV except of local Fox News. There is too much politics and brainwashing including ads on TV. But I am subscribed to CNBC Youtube channel.
  • Jeff S Just to think we are now down to basically 3 minivans the Chrysler Pacifica, Honda Odyssey, Toyota Sienna. I wonder how much longer those will last. Today's minivan has grown in size over the original minivans and isn't so mini anymore considering it is bigger than a lot of short wheel based full size vans from the 70s and 80s. Back in the 70s and 80s everything smaller was mini--mini skirt, mini fridge, mini car, and mini truck. Mini cars were actually subcompact cars and mini trucks were compact trucks. Funny how some words are so prevalent in a specific era and how they go away and are unheard of in the following decades.
  • Jeff S Isn't this the same van Mercury used for the Villager? I believe it was the 1s and 2nd generations of this Quest.
  • VoGhost I don't understand the author's point. Two of the top five selling vehicles globally are Teslas. We have great data on the Model 3 for the past 5 years. What specifically is mysterious about used car values?