General Motors vows no plant closures at Opel

General Motors said Thursday it hopes to soon reach a "comprehensive" deal with its German unions to restructure its troubled Opel subsidiary as union leaders insisted plant closures were off the table.

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"Opel management and German unions are continuing to discuss a broad range of issues that will help ensure the sustainability of the business, including productivity, cost and capacity," GM chief executive Dan Akerson said.

"We expect to have a comprehensive agreement in place sometime this fall."

GM's efforts to address overcapacity in Europe raised concerns about possible European plant closures, especially after a spokesman said one or more factories could be on the block. He later retracted the statement.

"We are negotiating the issue of capacity with IG Metall," GM spokesman James Cain said referring to the German industrial union of metalworkers.

"Those discussions include the future (of the) Bochum facility after the current product cycle."

He added that GM has "reiterated that it was honouring its contracts in place."

The IG Metall union said it would not discuss plant closures.

"IG Metall is not ready to engage in such negotiations," said Rainer Einenkel, head of the works council at Opel's Bochum plant and a member of Opel's supervisory board.

"We will do everything we can to make sure that no other European plant closes," whether that's in Spain, England or Poland, he added.

GM, which posted Thursday a $400 million loss in Europe in the second quarter following a $256 million loss in the prior quarter, has spoken for some time about the need to reduce excess capacity at its European subsidiary Opel-Vauxhall.

"In the past, we haven't moved fast enough to fix the things that we can control, but that has changed," Akerson said in a conference call discussing the largest US automaker's second-quarter results.

In late June, Opel's supervisory board approved a plan that involved deep restructuring, huge investment in the product range of the Opel and Vauxhall brands, and a new marketing strategy.

Akerson said the company has made progress on the key components of the European restructuring plan – "building a stronger team, investing in new products and addressing our cost and capacity."

GM has also reached "competitive operating agreements" with unions in England and Poland and "made good progress streamlining decision-making, reducing our material cost and managing our working capital and cash flow," Akerson noted.

Other automakers also need to address European overcapacity in order to return the industry to profitability and eliminate steep discounts being offered to help shift excess vehicles, chief financial officer Dan Ammann said.

"If you look across the industry, third parties have speculated there's somewhere between five and seven or eight assembly plants that would need to come out of the industry in the long term if it were to stay at these types of levels," he said in a conference call.

"Across the industry in Europe we're starting to see some of the required actions begin to occur which we haven't seen until now."

France's PSA Peugeot announced plans last month to eliminate 8,000 jobs and close its historic Aulnay plant north of Paris.

Fiat has temporarily suspended production at one of its Italian plants and recently warned that it may close a different factory permanently if sales did not improve.

GM's restructuring will not only affect blue-collar workers.

"In recent weeks, you have seen that we would not hesitate to act when change is required to make the business stronger," Akerson said.

That includes removing senior executives who "are not delivering expected results or alternatively who do not meet the highest standards for accountability and integrity," he added.

On Sunday, GM announced the immediate departure of the head of its US marketing, just weeks after the exit of its US design chief.

Opel chief Karl-Friedrich Stracke quit abruptly last month after just 15 months in the job. His interim replacement is Opel's fourth new chief within a period of just three years.

AFP/jcw