GERMANY: GM tells Opel staff it won't 'cut and run'
General Motors will not sell its loss-making European unit Opel or "simply close up shop and leave" it, chief executive Dan Akerson told more than 5,000 staff in Germany.
Reuters noted the former private equity manager had come under pressure from investors to divest or unwind Opel, which Morgan Stanley forecasts will post another US$1bn in annual operating losses on average to the end of 2021 after $16bn over the past dozen years.
While other senior executives have defended Opel's role within GM, this is the first time that Akerson has sworn loyalty in front of the workforce.
"Our protracted losses have even prompted some analysts to argue that we should sell Opel or simply close up shop and leave car sales in the region to others - I'm not about to do that," he said in a speech to workers on Thursday.
"As a global auto company, GM needs a strong design, engineering, manufacturing and sales presence in Europe. There's room for Chevrolet in Europe but Opel fulfils that role."
Unlike his number two, Steve Girsky, who called Opel "vital" to the operations of GM, analysts believed Akerson was open to a more radical approach given his minority view to sell Opel to Magna late in 2009.
But the GM CEO made it clear that the 23 new models and model replacements entering the market by the end of 2016 were proof that GM was committed to helping its European brand.
"If our intention was to simply declare Opel bankrupt, or let it drift until the economy rebounds, we wouldn't be wasting our time and money with these investments," he said.
Speaking with Girsky in Hall K48 at the Ruesselsheim plant, home to the brand's headquarters, Akerson's pledges of loyalty in English were projected on a screen with German subtitles.
"Recommendations that we 'cut and run' show you that some people simply do not see how important Opel is to our success," Akerson said.
"They also overlook the key role Opel and the ITDC (engineering and development centre) play in GM's global product development plans, and Opel's expertise in CO2 reduction and other technologies that have application around the world," he added.
Earlier this week, people familiar with the matter told Reuters that GM and PSA Peugeot Citroen had shelved talks on a deeper tie-up amid misgivings about PSA's worsening finances and a government-backed bailout.
Akerson, who said GM planned to grow and not shrink Opel as unions feared, only briefly mentioned GM's French ally.
"The fact is we lack economies of scale in critical areas and if we can achieve scale by partnering with PSA, that's what we are going to do," Akerson said.
One Opel employee who attended the event said the general reaction was largely positive.
"I wouldn't call it thunderous, but there was applause. Some might still be cynical but overall it was seen as a clear commitment to Opel and the important role it plays within GM - I don't think it was interpreted as Akerson playing some tactical game."
According to a GM statement, Akerson also said Opel would again sell over a million vehicles this year.
“There are several positive signs that demonstrate that our corporate plan is starting to work,” Akerson was cited as saying the the statement. He referred to the reduction of overheads by $300m in the year to date.
“We are relying on our own hard work and are not counting on a tailwind from the markets,” Akerson said.
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