Following several media reports over the weekend and so far today (Monday, 26 March), there are ominous signs suggesting General Motors has decided, as widely speculated, eventually to close its Bochum plant in Germany and, possibly, Ellesmere Port in England, and replace the two plants’ output with vehicles shipped from other factories across Europe and South Korea but likely not before agreements with unions expire in 2014.
That’s two years away and, if GM does wield the axe, its timeline would be similar to that for the closure almost exactly a decade ago of the Vauxhall passenger car plant in Luton, England, whose demise was telegraphed in October 2000, confirmed two months later and which built its last car in March 2002.
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The Wall Street Journal (WSJ), citing Germany’s WAZ media group, which in turn cited government sources, said Opel’s CEO Karl-Friedrich Stracke had informed the German chancellery of plans to close Bochum as the company prepares a new turnaround plan for its unprofitable European operations. Reuters added that a meeting between Stracke and the workers union was scheduled for Monday.
The WSJ had reported last week, citing sources familiar with the plan, that GM intended to close up to two European factories as part of a cost-cutting plan to resuscitate Opel. The plants under scrutiny were Ellesmere Port, which makes Astras mostly for export in north west England, and Bochum, a plant opened in 1964, the same year as the British factory.
“No decision has been taken to close any plant,” a GM spokesman told the WSJ in response to the WAZ report.
“We are following the situation closely and we are in contact with the management of Opel,” an economy ministry spokeswoman told Reuters on Sunday, pointing to Stracke’s comments that locations were safe at least until the end of 2014.
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By GlobalDataMeanwhile, that news agency also on Sunday cited German magazine Der Spiegel as saying GM may expand production capacity in low-cost countries while closing Bochum and Ellesmere Port. The magazine cited a GM internal strategy document.
If vehicle sales rise, GM would build the additional cars in countries such as Poland, Russia, China, India, Mexico and Brazil, Der Spiegel said, quoting the document, titled ‘Global Assembly Footprint’.
According to the document, which the magazine said was presented at a global GM business conference, GM plans to export an additional 300,000 vehicles to Europe from Mexico, Korea and China by 2016.
In contrast, local unions have recently asked the automaker to transfer production of Europe-bound Chevrolet products from GM Korea to underutilised GM plants in Germany.
“No decision has been made in this regard for Opel’s car production,” a GM Europe spokesman told Reuters on Sunday.
An Opel spokesman told Reuters GM would always seize the opportunities the global automotive market offered while declining further comment.
The WSJ said German government officials wouldn’t confirm a specific meeting but said the chancellery was in regular contact with Opel, just as it was with other major German companies, and that it expected the company would uphold its obligations to its workers.
Most industry observers agree GM has little choice but to close more plants after its European operations incurred billions in losses over the past decade.
The WSJ said Monday shutting down factories at some point is seen by the automaker and investors on both sides of the Atlantic as critical to restoring its profitability in Europe amid worsening vehicle sales.
As just-auto reported last week, unions are vehemently opposed and beginning to flex their considerable muscles.
In an interview with Germany’s Bild-Zeitung newspaper, Stracke said the company had no plans to close European factories before the end of 2014 while labour contracts prohibiting further job cuts and factory closures are in place, the WSJ reported, noting he didn’t rule out closures after those contracts expire.
“We will have to look at all manufacturing sites with a critical eye,” he said in the interview published on Saturday (24 March).
He added: “We have a contract until 2014 that secures manufacturing sites and we will stick to that contract.”
Stracke said no decision on potential plant closures was on the agenda for Opel’s supervisory board meeting on Wednesday, according to the WSJ.
According to Reuters, he also said there were “no taboos” in Opel’s efforts to become more profitable in future.
In a written statement issued on Friday, GM’s European labor leaders rejected the possibility of plant closures, arguing that the cost of carrying them out would “make sure it will take years for the company to return to profit.”
THE WEEK THAT WAS: GM raising its European axe?
