General Motors Company : GM's Opel Brand Plans to Close Bochum Plant After 2016
06/13/2012| 02:18pm US/Eastern
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--Opel prepares to close Bochum plant
--Willing to avoid forced layoffs until end-2016
--Decision on turnaround plan scheduled June 28
(Adds detail in third, labor chief comment in 9th paragraph)
By Christoph Rauwald
FRANKFURT--General Motors Co.'s (GM) German Opel unit said Wednesday it aims to stop producing cars at its plant in Bochum after 2016, but is willing to avoid forced layoffs until then as part of a compromise with labor unions.
"Opel needs to adjust its business in a way that enables profitability even in difficult market conditions," Opel Chief Executive Karl-Friedrich Stracke said in a statement.
GM's plan to close another plant in Europe comes at a time when the auto industry in the region is squeezed by large overcapacity. GM closed its Belgian plant in Antwerp two years ago, but most mass-market rivals avoided large-scale cutbacks in Europe so far, partly due to political resistance.
"With 2012 industry volumes expected to be down 20% from demand in the past five years, waiting longer to act would be irresponsible," Mr. Stracke added.
Opel's current labor deal, which rules out compulsory layoffs and plant closures, expires at the end of 2014.
Opel said the plant in Bochum, which was widely expected to be closed in 2015 to slash capacity, could remain open until the end of 2016 to produce the Zafira model. Opel said it aims to phase out production at Bochum after the Zafira model's lifecycle ends, but noted this is still subject to negotiations.
Opel didn't elaborate on possible cutbacks in other European countries besides Germany, but confirmed the brand's supervisory board is poised to decide on the turnaround plan on June 28. The eagerly awaited plan is set to include both cost cuts and investments to broaden Opel's product portfolio to attract a wider range of customers.
"Opel is a cornerstone of our global operations, and I firmly believe we are moving in the right direction," GM vice chairman and Opel supervisory board chairman Stephen Girsky said.
"The main points of the proposed business plan go in the right direction, but we will still need to hold talks concerning many of them," Opel's labor chief Wolfgang Schaefer-Klug said in a statement. "Our goal is to come to a common solution for Opel and all employees," he said.
GM's European unit employs around 40,000 staff, with Germany accounting for 20,800 people.
On Tuesday, GM Chief Executive Dan Akerson said he is hopeful the company soon will reach a cost-cutting deal with its German labor unions, which would be a key step in the company's drive to turn around its money-losing European operations.
Mr. Akerson said the auto maker is in "constructive, professional talks" with unions in Germany and other European nations, saying fixing its European operations is the company's top priority, followed by reducing the auto makers' outsize pension obligations.
GM needs the support of the region's labor unions to push through a restructuring plan for the German Opel banner and its British sister brand Vauxhall.
For years, unions and regional governments have fought moves by the auto makers in the region to cut excess capacity. The result is an overcrowded and largely unprofitable European auto industry--exacerbated by the region's sovereign-debt crisis--in which Opel and Vauxhall are among the weakest players.
-Write to Christoph Rauwald at christoph.rauwald@dowjones.com
(Sharon Terlep in Detroit contributed to this article.)
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