GM may have to take out a further plant: LMC

just-auto SEMINAR: GM may have to take out a further Europe plant: LMC Automotive

By Simon Warburton | 16 November 2012

LMC Automotive has raised the possibility General Motors may have to accelerate its programme of plant restructuring in Europe, while emphasising the need for high-capacity utilisation.

Speaking to just-auto (15 November) on the sidelines of yesterday's just-auto Industry Intelligence Seminar in the UK city of Swindon, LMC Automotive director of research, Arthur Maher, highlighted the need to address European over-capacity against a backdrop of continued lack of consumer demand.

"GM has taken Bochum out and from GM's perspective we think [they] may have to take another car plant out in Europe - they are crippled with excess capacity," Maher said.

Maher also highlighted the French market where PSA Peugeot Citroen and Renault are urgently talking to their powerful unions in order to drive ever-greater flexibility.

In PSA's case, it has already announced plans to shut its Aulnay plant near Paris and cut up to 8,000 jobs in France, while Renault held the second of its round of meetings with all its major unions this week, extending the possibility of no factory closures in return for radical restructuring.

"The unions - quite rightly - are very concerned," said Maher. "One third of European plants are operating at 20% and on third are at capacity - that is not going to change that much.

"If you are PSA, Renault and Fiat, you are looking five years down the road and recovery in the European market is not going to bail us out. If you take the view you will fight to retain jobs and capacity, you already start with a massive burden on your shoulders."

The LMC research director emphasised the solution was not necessarily to drive down wages, but rather to concentrate on operating plants at 80% utilisation, citing the example of GM evaluating the return of Chevrolet production to Europe from South Korea.

"What has changed - certainly in Europe - is when recovery has come - and it will - it will no longer be on the scale of normal recoveries," said Maher. "These financial and banking crises will run and run for years. There is a permanent loss of growth potentially in the European market.

"Renault-Nissan has taken this on board, saying there will not be a massive recovery that will bale us out, but there will be an improvement."

Sectors: Vehicle manufacturers, Vehicle manufacturing

Companies: GM, PSA, Renault, Peugeot, Citroen, Fiat, Chevrolet, Nissan

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