By on January 26, 2013

Industrial-strength theater

Yesterday evening, while yours truly was in seedy Tokyo bars, rubbing shoulders and more with paid informants, word reached us that Opel’s new sales chief Alfred Rieck allegedly threw-in the towel and left Opel in disgust, after only seven months of valiantly trying to move the damaged goods called Opel cars. After a few phone calls to Germany this morning, a different story emerged. Siehe unten.

The Villain from Germany and China: Alfred Rieck

“Rieck did not go,” said one of Rieck’s former colleagues at Volkswagen, “er wurde gegangen.” He has been gone, as the saying goes in Germany’s executive speak. Or as Automobilwoche [sub] puts it bluntly: “Rieck was fired.” Opel’s leaky supervisory board (the leaks usually spring on the union side) floated the story that Rieck had not been up to the difficult, not to say impossible task of turning around sales and market share at Opel. Which, after only seven months on the job, is a bit much to ask anyway.

Before Rieck foolishly embarked on the mission impossible at Opel, he had done quite well. As head of Skoda in Germany, he helped positioning the brand as the smart shopper’s choice. Sent to China, he successfully established the Czech brand in a market awash with brands. Before, the former Marketing Chief of Volkswagen had advanced to Senior Leader in charge of sales and marketing of luxury Volkswagen cars, a task that is nearly as challenging as selling Opels. If you can sell Phaetons, selling Adams should be a cinch. Rieck had been hired by former Opel chief Stracke when he was still in charge. Girsky and Sedran reportedly never warmed up to Rieck. As a man who knew what he was doing, Rieck was in the way at Opel.

The new knight from Germany and China: Karl-Thomas Neumann

The scuttlebutt from Germany also says that fired Opel sales chief Rieck and designated Opel CEO Karl-Thomas Neumann shared the same floor, but few opinions while both were at Volkswagen in China. It is said that Girksy and Sedran could dispose of Rieck while saying that they want to clean house for Neumann. In German management speak, the genre played on the rickety stages of Rüsselsheim is called “Meucheldrama,” a low budget killer epic. Some call it a “Schmierenkommödie” – fringe theater.

The stand-in’s stand-in: Thomas Sedran

In a play awash in fake blood and real losses, Sedran is a paid extra, a puppet played by Girksy and the people who pull Girsky’s strings. Stand-in CEO Sedran is of the species homo auxiliatus, he is a management consultant. Sedran worked for the Munich office of Alix Partners, the same consultancy that helped Girsky engineer the federally-managed bankruptcy of General Motors, and the subsequent take-over by an unholy alliance between the UAW and an Obama administration that owes its existence to the unions. Don’t forget: Girsky himself was a (very generously) paid UAW operative, who came to GM’s board as a representative of the union’s VEBA trust.

According to many reports, it was Girsky who opposed the sale of Opel to Magna and Russian interests, a deal that was to be lubricated with a generous helping of German tax money while GM had none.

Puppet-master on a string and stand-in pro tem: Steve Girsky

Assuming that Girsky had the backing of UAW and Washington, the other boardsitters nodded as usual. Alix Partners had developed an optimistic turn-around concept for Opel in 2008/2009, and the document became the ammunition that helped Girsky shoot down the sale of Opel at the last minute. Germany’s government, from stupidly snubbed Frau Merkel on down, turned into perennial enemies of Opel in a time when Opel could not afford more enemies. Sedran and his Alix Partners employers were relieved. Opel going to Magna and Russia bankers would have meant an assured end of Alix Partners work for Opel. Opel is a management consultant’s dream, as long as the corpse is kept breathing, it will never stop needing restructuring advice. A sold Opel most likely would have caused terminal indigestion at Magna and the Russians, but hey, their problem. Unsold, Opel keeps draining the blood out of GM.

Of course, Opel’s turn-around concept was a dud, or a “Blindgänger” as they call it over there. Unexploded ordnance devices have the nasty characteristics of exploding at inopportune moments over many years, and it is the momentously failed Girsky/Sedran/Alix Partners turnaround of Opel that weighs down on GM’s bottom line, cash flow and stock valuation. Instead of turning around, Opel turned deeper in the morass of a collapsing European car market, to which Opel was and is shackled by its Detroit rulers. The sale to Magna would have been GM’s peace with honor, just like Ford elegantly and honorably untangled itself from the strangulation by Volvo, JLR, et al. Instead , Girsky, ammunitioned by Alix Partners and Girsky’s confidante Sedran, walked GM deeper and deeper into the German quagmire, making Rüsselsheim GM’s Vietnam.

The English extra: Duncan Aldred

It was no surprise to see Girsky dispatched to German shores, first as Chairman of Opel’s supervisory board, then as stand-in CEO, who drafted his water boy Sedran as interim-CEO after someone told him that according to German company law, it is less than smart to be both supervisory board chairman and supervised CEO in personal union. I can well imagine that RenCen executives, sick and tired and bruised from kicking themselves daily for having listened to Girsky’s stupid advice of holding on to terminally ill Opel, told Girsky: “You always knew how to whip those German clowns in shape. Go over there and do it.” Crowned as Emperor of GM’s Europe, Girsky was dispatched on a suicide mission. RenCen got rid of know-it-all Girsky, and had someone to blame. Brilliant.

In the German upper management vernacular, which Girsky hopefully is learning, such an act is called “wegloben”, literally “to praise away”, usually understood as “to kick upstairs” or as “transfer to Siberia” on a one-way ticket.

While in Germany, Girsky had nothing better to do than find the French patient as an ally: PSA, the company that managed to leverage the fact that it is Europe’s second largest automaker into debilitating losses. No wonder GM and PSA get along. We shall keep them as material for the next theater season. Holding a B.S. in Mathematics form UCLA, Girsky is convinced that minus times minus equals plus. (Just don’t add them, please.)

Consultant Sedran’s interimistic CEO gig likewise raised eyebrows, this time in the management consultant community. Changing sides, switching from consultant to manager is not the jump in one’s career as which it is often sold. In the consultancy business, your peers look down on you when you go to the Dark Side. It is usually the under-performing consultants that are disposed into the landfill of executives “at the client.” Once you have landed there, you are supposed to provide your former colleagues (who usually know interesting details of your prior life) with juicy contracts, while the grey beards at the company will not stop trying to trip the intruder, often right into their open knives. The act of giving juicy contracts to your old cronies at the management consultancy often serves as a handy trip-wire. Belatedly, you realize that the consultant’s job of recommending change is much easier – and often much better paid – than the manager’s nasty job of implementing change. Especially in the morass called Opel.

“Man muss schon ein grosses Arschloch sein,” to take a leading position at Opel these days, says my German informant with Saturday-morning bluntness. His assessment of the attraction of Opel jobs, and what assembly of assorted asstute assets they manage to draw, shall remain untranslated. All I can say is that in Germany, the announcement that one signs up as an executive at Opel usually elicits an “was hast du den angestellt?” What did you do to deserve such punishment.

PS: Rieck’s job has been filled, as it is the custom at Opel, on an interim basis. Vauxhall brand chief Duncan Aldred reports as interim sales chief of Opel to interim CEO Sedran until Neumann takes over in March. Girsky praised Duncan for having turned Vauxhall into “the fastest growing brand for retail customers in the United Kingdom.” European auto execs find this statement humorous. Due to UK tax regulations, your first new car in the island nation, and hopefully many more, is a company car as part of your salary package. More than half of the UK’s new car sales are “fleet” sales. According to data released by the UK’s Society of Motor Manufacturers and Traders (SMMT), Vauxhall’s share of the UK market dropped to 11.36 percent in 2012, down from 12.09 percent in 2011. It’s all relative: In Germany, Opel’s market share dropped from 8 percent in 2011 to 6.9 percent in 2012, with Rieck on the job during six months of that year. Compared to that, Aldred’s loss looks like a gain. At least in the world of Opel.

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41 Comments on “GM’s Interim-Opel-Opera: Fringe Theater In Rüsselheim – FREE: Bonus Short Course In German Management Speak...”

  • avatar
    Polar Bear

    6.9%? Gott im Himmel.

  • avatar

    Great story. Having had to deal with “consultants” over my career, typical drama except in German.

  • avatar

    Girsky advised Red Ink Rick all the way into BK so he’s sent to fix Opel? so far we’ve got turnover galore, cuts and closings, an alienated workforce, further brand damage, and another very costly and senseless European partnership… all adding up to more billions of losses. why is this bankster still around anyway?

  • avatar

    I guess in a perfect world, 7% market share would be plenty to profitably build automobiles. These days the manufacturing sector of each nation is turned into a political whipping boy with the narrative manipulated to suit whoever is speaking. The money that eventually will be poured into this black hole would be better used to buy off the work force and politicians. This is the company that paid FIAT $1 Billion to go away, right?

    • 0 avatar

      actually it was $2 Billion to exercise the put option.

    • 0 avatar

      @ olddavid:
      “I guess in a perfect world, 7% market share would be plenty to profitably build automobiles.”

      If all you have is 7% of Europe, then you own 7% of a shrinking market which will shrink more as they years go on. A lot of Europe’s population is about to buy its last car. Once they retire, they usually keep it.

      The fight for a smaller and smaller pool of buyers is getting ugly, and will get uglier.

      In that highly imperfect world, you can only survive if you are firmly established in growth markets.

      • 0 avatar

        so with opel gone, are buick & gmc also going to disappear?

      • 0 avatar

        I watched AMC evolve on the fly for the 18 years our family owned the franchise. I believe it was a minor miracle they survived long enough to be absorbed by Chrysler. However, even a demographically challenged Europe with its aging population should support a carmaker with a PPV of 400k, yes? What their real problem is overcapacity and the societal expectations of the wind down to eventual profitability. Ideally, a GM divestiture but I’m too old and stupid to have any idea how that would be accomplished. I say this as the one human in America who has enjoyed several Opel products (Manta, GT, Catera).

  • avatar

    The sale to Magna would have been GM’s peace with honor, just like Ford elegantly and honorably untangled itself from the strangulation by Volvo, JLR, et al.

    Except for the fact that Opel is doing the lions share of GMs heavy lifting in the platform engineering department. The PAG group at Ford was doing very little engineering for the company as a whole.

    • 0 avatar

      Exactly…if Opel cars such as Insignia(Regal)and Astra(Verano) and Mokka (Encore) were sold as Opel in China and the US, then Opel would be doing well as a global company suffering a downturn in the Euro economy.
      On paper, Opel looses money. In reality, Opel designs make GM a lot of money globally. Sadly, since 2010, the fees on Opel designed cars go to Maryland, USA as opposd to Germany.

      Here’s an idea: Take things global as Opel/Vauxhall/Buick. Regardless of what GM says, Buick is already a global brand considering it sells far more cars than Caddy; furthermore, such a move would raise stock price. In addition, GM should look at partnering with PSA, not in Europe, but as part of an Asian partnership in which profits are split 50/50–use PSA designs but build them at GM factories and sell them at GM dealerships. Such a move would equal profit for GM minus design and R&D cost. Also, if PSA were to go bust in Europe (doubtful), GM would be well-positioned to buy out global ops.

      GM needs to build more partnerships, like Renault, and has a real chance here to exploit a weak auto maker.

      • 0 avatar

        @Steve: I think we’re already seeing the link up of the “international brands” (Holden/Opel/Buick, or HOB) in it’s nascent stages. I remarked yesterday that I’ve seen a fair amount of Opel DNA in recent Buicks, so much that when I see an actual Opel I wonder where the Tri-Shield is on the grille.

        To me a global HOB makes a lot of sense, at least as much as VW has it’s tiers of cars, i.e., Seat/Skoda, VW, Audi, and their premium brands. I would love to see a return of Opel to North America, even rebadged as Buicks.

        I can see a market for the Adam and the Zafira right off the bat, particularly in the US, as we have no corollary to the Orlando and GM has nothing that remotely competes with the Mini. I’m sure this has been studied intensely over at the Ren Cen, but I’d bet that those two would be a good addition to any Buick dealer’s arsenal and not directly compete with anything that US Chevy dealers sell.

        At least we get the Mokka (Encore), but me being the proletarian I am, I’d rather go with the Chevy Trax than spend the bucks for an Encore, no matter how nice it is. I can also see a day where the Astra becomes the Verano here in the US, mostly because of the impending release of the Cascada here.

        GM has linkages with all kinds of manufacturers across the world, so potentially anything could happen.

        I’m going to say it first: Mark Reuss 2014!

  • avatar

    Exceptional article Bertel. One of your best. …assembly of assorted ASStute assets…That can’t be a typo.

  • avatar

    I’m an idiot. I just googled Adam Opel sales figures for 2011. 1.2 MILLION? And they don’t make money? Who the hell is steering this ship? Is their capacity 2 million? Now I’ll shut up. My wife says sometimes I fall in love with the sound of my own voice. Sorry.

    • 0 avatar
      Polar Bear

      General Motors can make 10 million cars and still go bankrupt.

      • 0 avatar

        Good point. What I cannot get my head around is the fact that the other German makers with the same legacy costs intrinsic to their home-grown products are making money. Perhaps Bertel is right. In my lifetime, VW has gone from a state-owned one-trick pony to a world leader. No more plant manager suicides in their future. Maybe seppuku(sp) is called for in this case. I loved the Nixon reference from the Principal.

    • 0 avatar

      GM went factory crazy when the wall came down and built to many factories in E Europe. This was supposed to cut costs but instead created over capacity. At the same time, VW really got it’s act together which hurt market share.

      If GM were to sell the East Euro plants and settle for weak high labor margins, Opel would be fine. Again, Opel looses money on paper.

      Lastly, Opel is a damaged brand and the almost-sale made things so much worse. This is why GM keeps telling the world how much they love Adam Opel.

      Sadly, Opel cars look and drive better than VW. The problem is Opel just isn’t cool.

  • avatar

    What Opel needs is more executives with white hair.

    • 0 avatar

      There’s this car guy, he’s retired, likes to fly old jets, worked for a BUNCH of automakers on both sides of the pond. Opel JUST might be able to get him out of retirement. I think his name is Bob something, it’s right on the tip of my tounge…

  • avatar

    Just an excellent piece. Brings up all the relevant info with the newer revelations about Girsky that we didn’t know at the time. Hope one of the bigger news organizations picks it up for syndication, because it deserves a wider audience.

    One other thing changed earlier in 2012. German bankruptcy laws changed for the first time since 1877 or something. No longer do German companies have to reorganize and become British companies to take advantage of lax bankruptcy laws in the UK. The new German law is apparently based on the US model.

    So there will be a lot of glub, glub, glub sounds as union leaders at Opel sink below the waves, still yakking on about their supposed rights and the primacy of work councils. So Girsky does have that as the irony of a union man sinking a union happens starting next year.

    • 0 avatar

      it’s what we do know about Girsky that makes this unfathomable. adivsor and consult to the UAW, vice-chair, mission man for the puppet masters, and overall general failure. not sure why I even care except for the many good people at GM. these leader types are ridiculous. this guy is worse than John Smith and that is really saying something.

    • 0 avatar

      Snarky post…The Unions have rights. Oh, and those worker’s councils produce the best cars in the world. The fusion of labor and managment has made possible the rise of BMW, Benz and VW not to mention the fine work done for GM and Ford in Germany.

      Think before you ramble off your anti-worker/anti-union script.

  • avatar

    Coming as he does from a union background, and with his extensive experience in begging at the public trough for capital, Girsky is at least well suited for the task of chiseling money out of the German government to keep Opel’s economic basket-case plants limping along.

    The real problem is the stench of death that surrounds the Opel brand. Maybe best to slap Chevy and Buick badges on the Adam and the Mokka and sell ’em around the world. And once they’re no longer identified as German cars, quietly close down the plants one by one as the German government proves less and less willing to shovel out the occasional grant.

  • avatar

    this is just hilarious. Thanks for making my day Bertel

    “making Rüsselsheim GM’s Vietnam.”

    “Opel is a management consultant’s dream, as long as the corpse is kept breathing, it will never stop needing restructuring advice.”

    • 0 avatar

      I liked those two lines, also. Excellent writeup, Bertel.

    • 0 avatar

      Management consultants are truly the vultures of the consultancy world. I interned at a company after the geniuses of one of the major consultancy firms had been there, they had managed to create a dual leadership structure, so one boss was the subordinate of another boss, except that some times the boss was the subordinate to the boss he was usually managing. So if one had a customer that required discounts – usually in the € 100k+ range – priority in the production line or something ells a bit more complex, well, then nobody had the actual clout to decide what to do without going waaaay to high in the hierarchy. This horribly ineffective system was – as said before – the brain child of a management consultancy, the same consultancy that produced a report that promised huge post merger savings (that led to the dual leadership structure) before the merger, I also believe that the same firm where hired to help “harmonize business and company cultures” after my internship.

  • avatar

    Is this a GM thing, establishing markets for products that will vapourise in a couple of years? I note that OPEL products are being pushed here in Australia and Holden Commodore variants are being pushed into NA. GM is trying to euthanise/destroy/remove OPEL from the GM world and announced that the Commodore will probaly not last beyond 2016. So that two expensive (probaly) exercises will last two years and then leave a “SAAB” taste in everyone’s mouth. Is it staying or is it going? Do I buy or abandon? Curse you GM!

  • avatar

    Re: Rieck: does VW’s health plan not cover mole removal?

  • avatar

    At Volkswagen, mole removal is in the capable hands of the Werkschutz, their security department …

  • avatar

    The R&D center is part of the items held by GM as collateral for Opel’s loan. In fact, the only items left in Opel’s possession are the German plants and Zaragoza’s plant. They have prepared Opel for some kind of action. My guess is they will declare bankruptcy and close two of the four German plants. I would also guess that the German plant issue is why PSA said no.

    GM does not really want to sell Opel. They want to close some plants, but keep the brand. Now that they have moved all the valuable stuff into GM, they can swing the axe as they like. There is plenty of European money out there for anyone that wants Opel, but GM is not sure an American brand name can protect their share.

  • avatar

    “Man muss schon ein grosses Arschloch sein,” to take a leading position at Opel these days, says my German informant with Saturday-morning bluntness.

    I loled, but poor Opel and the Adam will not save them. I think they better look at Dacia as an example.

  • avatar

    What I find amazing is that despite the amount of drama at the top, Opel cars are not that bad. The engineering is not bad, the interior is good and from the outside it looks attractive as well.
    One of the problems: the brand has an out-dated image in Europe. You’re sort of a loser when driving one, while VW doesn’t really have that. To me they are sort of the same. Perhaps the whole drama at the top is distracting people from looking at their cars.

    If I were to point the blame: GM. Just as I said before: changing the coach of a losing team too often is indicative of rotting at the top.

    • 0 avatar

      and you don’t teach a man to play football by making him the coach. ie Cadillac.

      • 0 avatar

        It’s a good way to get rid of a guy who doesn’t know football. Coaches are hired to be fired, and they’re just extending the practice to auto executives. At Opel, it’s starting to look like a ritual sacrifice for good luck/to appease the Gods. In the old days, they sacrificed virgins, but good luck finding one today.

    • 0 avatar

      The interiors might be many things but good is not one. My “knock on the dash board the pull it” test puts them at PSA level, and that’s not a good place to be at. The smaller cars even have that PSA made-from-sponges-seats that the french find so appealing.
      The engineering might be up to snuff in the lower rungs of the automotive hierarchy, but, they are truly unable to build something that builds brand image. The GSi of the early 90s was probably the last opel that compared favorably to anything, nobody that isn’t a dyed in the wool opel fan will chose OPC over GTI from Volkswagen, RS from skoda, ford or renault, a cooper or any other good offering from their competitors.

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