IHS Global Insight Perspective | |
Significance | General Motors has outlined where it will make around 9,000 jobs cuts in its rationalisation of its Opel and Vauxhall operations. |
Implications | According to the plans announced by acting CEO Nick Reilly, job cuts in Germany will form over 50% of the reductions. The leader of Opel's German workers council, Klaus Franz, has already described the plans as unacceptable. |
Outlook | While Opel's plants in Germany were given a reprieve by Reilly only yesterday, the fact that the majority of job losses are scheduled to come from the company's German and Belgium production bases means that some form of industrial action is possible. |
General Motors (GM) has revealed its plans for where the job losses that are planned throughout its European Opel and Vauxhall units will be allocated. After a meeting between GM's management, including acting GM Europe chief executive Nick Reilly and trade union leaders, at Opel's headquarters in Rüsselsheim, both Reilly and Opel works council leader Klaus Franz outlined the plans. Reilly said, "Overall, we are going to reduce our capacity by around 20%, and we expect to reduce our people by approximately 9,000." Klaus Franz, Opel's labour leader, added that GM planned to cut 8,684 jobs in Europe, of which 7,230 would go in Germany and Belgium. GM employs about 55,000 people in total in Europe, although this figure includes the Saab production facilities in Trollhättan, Sweden. Saab has previously been put up for sale separately by GM, but prospective buyer Koenigsegg pulled out of the deal this week, leaving the future of the brand very much in doubt after had previously said it would only support the outfit until the end of the year (see Sweden: 25 November 2009: Saab Future in Doubt as Koenigsegg Withdraws Offer).
According to a Reuters report, works council leader Franz outlined the following breakdown for job losses across GM's European operations, not including the company's Saab unit.
- Rüsselsheim, Germany: Nearly 2,500 at Opel headquarters to go—1,300 in administration, 862 in production, 548 in engineering and development center.
- Antwerp, Belgium: GM has not yet made a final decision on the future of the plant, which employs 2,321 workers. If it closes the plant, all workers will go. If GM decides to build a small sport utility vehicle (SUV) there, as agreed in April 2008, then only 750 jobs would be cut. However, as things stand at the moment, the full closure of the plant looks the most likely option.
- Bochum, Germany: 1,799 jobs to go.
- Zaragoza, Spain: The Corsa five-door and Meriva plant would see losses of 900 jobs.
- Luton, England: The light commercial vehicle plant, which builds Renault Trafic and Opel Vivaro van models, would see 354 jobs eliminated.
- Eisenach, Germany: The plant which manufactures the Corsa would lose 300 jobs.
- Kaiserslautern, Germany: The powertrain plant would also lose 300 jobs.
However, Franz also stated that there were no jobs at risk at the Vauxhall plant in Ellesmere port, England and the Gliwice plant, in Poland, both of which have been allocated production of the new Astra, which is already being manufactured at both plants. In addition there will be no job losses at the powertrain facilities in Szentgotthard, Hungary and Aspern Austria. However, following the meeting Franz said the way GM had structured the job cuts was unacceptable. According to a Dow Jones news report, he criticised GM's management for not giving sufficiently detailed information on GM's plans for Opel going forward. He also criticised the fact that GM has changed details to agreements that had been made in recent months regarding the Magna restructuring plan for Opel, which had been agreed with GM's chief negotiator John Smith. He added that the company's German workforce would seek support from the national government during further negotiations due to take place with GM's management. Earlier Nick Reilly had said he hoped to finish consultations with Opel and Vauxhall's workforce in December, adding "Two to three weeks should be the timetable we set for ourselves."
Outlook and Implications
While it appears that GM's proposed rationalisation plan for its Opel and Vauxhall units is not radically different from that of the original Magna plan, with was negotiated with GM's John Smith, there is a greater emphasis on job losses in Germany. Given the political power and influence of the workers' council led by Klaus Franz in Germany, this could end up causing GM some difficulties in implementation, especially as regional and national government will back their cause. It seems there is something of a quid pro quo between yesterday's guarantee that all four German manufacturing plants would remain open and the larger number of German job losses that are now being sought.
Almost half of the total job losses that are planned by GM for its European operations are scheduled to come from just two German Opel sites, Rüsselsheim and Bochum. The majority of the job cuts in Rüsselsheim will come from expensive professional white-collar staff in management, administration and engineering roles, although this is unlikely to ease the process of industrial relations in terms of administering the job losses. It may be possible that GM may be looking to influence the German government's attitude to it retaining control of the Opel brand. The German government was taken aback by GM's decision to retain Opel, with Chancellor Angela Merkel personally embarrassed, having been such a vocal supporter of the Magna bid, and her new Economics Minister Rainer Bruederle continually reiterating that GM must now pay the majority of restructuring costs itself (see Europe: 18 November 2009: GM to Cut European Capacity by 20%; Acting CEO Says Government Aid May Influence Cuts).