Opel's Bochum Workers Reject Deal, Prepare For Costly Battle
GM has a huge problem in Bochum – or an unexpected opportunity. Workers at Opel’s Bochum plant yesterday refused a restructuring plan that would guarantee auto production in Bochum through 2016, and that would keep the plant making components after that. GM answered on the same day: ”Production of the Zafira Tourer and the waiver of enforced redundancy will end after 2014.” This would open the door to closing the doors in Bochum.
It also could become extremely costly for GM.
After other Opel plants had voted to accept the restructuring plan, workers at Bochum rejected the proposal yesterday with 76.1 percent of the votes, Automobilwoche [sub] says.
Currently, there is a contract that keeps jobs safe and plants open through 2014. The restructuring plan would have extended the production of the Zafira through 2016. After 2016, Bochum would have been used for component manufacturing and a parts depot, employing 1,200 workers. Currently, 3,900 people work in Bochum. This number can now be reduced to 420.
What sounds like a win for Girsky & Co. can become a huge drain on GM’s profits. According to German law, GM can close the Bochum plant, however, it would have to offer jobs at other German plants. If Opel wants to get rid of workers and payroll, it must negotiate a restructuring plan with the works council. That failed yesterday. If there is no plan, and if the works council opposes, fired workers can and will sue Opel. The severance payments will then be determined in court. This mean s huge exposure for a large company with deep pockets and few friends in Germany.
Assuming an average negotiated severance payment of $200,000 per worker (using Opel’s Antwerp and Ford’s Genk plant as examples), a good negotiated deal with a cooperative works council would cost GM upwards of $700 million. In an adversarial situation, this number could quickly snowball to several billions. A few weeks ago, Bochum works council chief Einenkel promised “the most expensive plant closure of all times.” He said it “ would cost GM billions,” and that “Opel would not survive this.”
It looks like the Bochum workers have written off Opel and want to get out for as much money as possible. In their situation, I would do the same.
The refusal of Bochum’s workers also signals troubles with the IG Metall union. The Bochum works council had been increasingly at odds with the unions.
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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Why didn't GM sever the Opel limb when they had the bankruptcy chance a few years ago?
"A few weeks ago, Bochum works council chief Einenkel promised “the most expensive plant closure of all times.” He said it “ would cost GM billions,” and that “Opel would not survive this.” Well, that's a constructive attitude. Employ us, or we kill you. In which case we, and a bunch of us also are unemployed. Brilliant!