FRANCE: General Motors Europe chief plans to "deal with" excess capacity soon
General Motors will have a detailed plan to address excess capacity in Europe within two months as it prepares to step up restructuring efforts in the region, a senior company official told Reuters on Tuesday.
The money-losing region, where Fritz Henderson took over as chairman in June after heading GM Asia-Pacific, has been under an almost constant state of restructuring since 1998, the news agency report noted.
"We need to get this thing nailed down here in the next 60 days," Henderson told Reuters. Our view is that today we have a certain amount of excess capacity, we're going to assume that that's going to continue, so therefore we have to deal with it today."
Henderson reportedly offered few details about possible plant closings or job cuts in Europe, where GM employs 62,000 people and last reported an annual profit in 1999. But he sounded a note of urgency about the region, saying he was unable to forecast when it would return to profitability after losing $US504 million last year and $1.0 billion in 2002.
"We'll rationalise and deal with our excess capacity," he told Reuters.
Henderson reportedly indicated that one of GM Europe's assembly plants may ultimately be targeted for closure under the turnaround plan. Cuts are also likely to made in GM's powertrain operations, he said, adding that the automaker faced "significant excess capacity in gasoline engines" due to the growing popularity of diesels across Europe.
The news agency noted that GM's Opel division and Saab have both been struggling under growing price pressures in Europe, losing revenues and market share under stiff competition from European car makers such as BMW and Audi.
"It's been a bit tougher than we thought," GM chairman and chief executive Rick Wagoner told Reuters, when asked about the outlook for halting the car maker's extended European losing streak.
"The biggest single issue has been pricing," Wagoner reportedly said. "You always tend to underestimate the rate that pricing falls."
Reuters noted that GM manages its engine and powertrain operations in Europe together with Fiat Auto, and added that Henderson was due to meet later on Tuesday in Paris with executives from the troubled unit of Italy's Fiat SpA.