• Germany's news in English

Jobs fears rise after shock Opel resignation

The Local · 14 Jul 2012, 12:30

Published: 14 Jul 2012 12:30 GMT+02:00

Facebook Twitter Google+ reddit

The situation in Germany is actually better than in many European countries where large auto sectors have been slow to react to a glut in output as sales slumped.

But after agreeing to management plans aimed at keeping as many workers employed in German plants as possible, unions are now drawing the line.

On Thursday, GM Europe chief Karl-Friedrich Stracke quit suddenly, raising fears that a deep restructuring plan to steer the loss-making unit Opel back into profit could now be in jeopardy.

The same day, GM's French partner Peugeot Citroen (PSA) announced 8,000 jobs cuts as part of a radical overhaul much larger than expected.

In the western German city of Bochum, the head of the works council at the local Opel plant, Rainer Einenkel, told AFP that GM would be held to its word.

"Promises must be kept, regardless of who is in charge," he said. "We tried to work on solutions with Stracke so plants would not be closed. I hope that GM sticks to the agreements."

The works council also wrote to employees, warning Opel and GM to uphold the Stracke plan.

"A new debate about plant closures would further unnerve staff and customers and would lead to clear damage to the image and market share of Opel," it said.

The head of trade union IG Metall, Berthold Huber, said GM must take "decisive and ambitious" action to help its ailing unit without closing factories or shutting labour out of the process.

"This is about nothing less than Opel's future," he said in a statement. The situation is similar, if not worse, in Italy and Spain.

Jürgen Pieper, an auto analyst at Metzler bank told AFP that in general, European car factories were working at about 70 percent of capacity.

Nicolas Bouzou, an Asteres economist noted that "to be profitable, an auto factory must function at least at 80-85 percent."

Some have managed to do so, with German luxury brands BMW and Daimler, which owns Mercedes Benz, running at around 90 percent, and Audi, a high-end brand owned by Volkswagen, also maintaining a strong cadence.

They benefit from continued strong demand for premium autos in emerging markets, and VW's solid presence in China allows it to compensate for higher labour costs back home in Germany.

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.

Material, development and production costs would all be cut and "better use made of synergies arising from the tie-up between GM and French partner PSA Peugeot Citroen," Opel said.

Talks are currently underway to keep the Bochum plant, which had reportedly been mooted for closure, open until the end of 2016 in a deal.

Opel has also pledged to negotiate with unions to prevent job cuts across the board until 2016, two years beyond the already agreed date of 2014, in exchange for a pay hike freeze.

Talks are to resume in October, IG Metall said. But Stracke was reportedly pushed out after just six months in the job owing to poor sales and a lack of faith in his plans to turn the firm around.

Opel declined to comment but the company's first-half 2012 sales fell by 9.3 percent. GM's European operations have run up billions of dollars in losses over the past 10 years.

Many European automakers tried to avoid closing plants as sales fell during the global economic crisis and now face situations that have deteriorated even .

Story continues below…

According to a study by AlexPartners, only three European plants have been closed since 2007. In the United States, 18 factories were shut down over a four-year period, allowing those that remained open to operate at around 88 percent of capacity.

"In the end, (European) production will have to adapt to demand. It is only then that they will become profitable again," said Laurent Petizon, a director at AlexPartners.

UBS analyst Philippe Houchois said: "Given how overcapacity is spread across the European Union, each of the generalist automakers, PSA, Renault, Fiat, GM and Ford would theoretically need to shut down at least one plant."

In early July, Fiat boss Sergio Marchionne warned that his group would have to close a factory if the European market remained in a slump over the next two to three years.

Automakers for the most part have the financial means to pay for such shut-downs without having to call on public funds, Houchois said, which reduces the amount of leverage available to governments.

In Spain, a PSA factory in Madrid-Villaverde is believed to be under threat, and experts say the Opel plant in Bochum will likely close after 2016.


The Local (news@thelocal.de)

Facebook Twitter Google+ reddit

Your comments about this article

16:37 July 14, 2012 by Englishted
You can't have it both ways ,austerity will cost jobs fact , and the rest of Europe and I'm sure Germany if the unemployment figures were not "cooked" is looking for growth as the only way out of recession .
Today's headlines
Man dies after beating for peeing near Freiburg church
The Johannes Church in Freiburg. Photo Jörgens Mi/Wikipedia

A middle-aged man from southern Germany has died after being attacked by a group of men who took umbrage with the fact he was urinating in the vicinity of a church.

The Local List
Seven German celebrities with uncanny doppelgängers
Former Berlin mayor Klaus Wowereit and actor Alec Baldwin. Photo: DPA; Gage Skidmore, Wikimedia Commons

Check out these seven look-a-likes of well known German figures - we admit that some are more tenuous than others...

Israel seeks to buy three new German submarines: report
A Dolphin class submarine. Photo: DPA

Israel is seeking to buy three more advanced submarines from Germany at a combined price of €1.2 billion, an Israeli newspaper reported Friday.

Here’s where people live the longest in Germany
Photo: DPA

Germans down south seem to know the secret to a long life.

More Germans identify as LGBT than in rest of Europe
Photo: DPA

The percentage of the German population which identifies as lesbian, gay, bisexual or transgender is higher than anywhere else in Europe, according to a new study.

'Reichsbürger' pair attack police in Saxony-Anhalt
File photo: DPA.

A "Reichsbürger" and his wife attacked police officers on Thursday, just a day after another Reichsbürger fatally shot an officer in Bavaria.

Five things not to miss at the Frankfurt Book Fair
Photo: DPA

From consulting a book doctor to immersing yourself in an author's world with the help of virtual reality, here are five things not to miss at this week's Frankfurt Book Fair, the world's largest publishing event.

Parents who don't get nursery spot for kid entitled to pay
Photo: DPA

The Federal Court of Justice (BGH) ruled on Thursday that parents whose children don't receive placements in nursery care are entitled to compensation.

Eurowings braces as cabin crew union proclaims strike
Photo: DPA

A union representing cabin crew for Lufthansa's budget airline Eurowings announced that strikes could take place at any time over the next two weeks, starting on Monday.

Mysterious German U-boat wreckage found off Scotland
Photo: ScottishPower

First World War U-boat "attacked by sea monster” thought to be found off Scottish coast.

Sponsored Article
How to vote absentee from abroad in the US elections
10 things you never knew about socialist East Germany
Sponsored Article
Last chance to vote absentee in the US elections
How Germans fell in love with America's favourite squash
How I ditched London for Berlin and became a published author
Sponsored Article
How to vote absentee from abroad in the US elections
12 clever German idioms that'll make you sound like a pro
23 fascinating facts you never knew about Berlin
9 unmissable events to check out in Germany this October
10 things you never knew about German reunification
10 things you're sure to notice after an Oktoberfest visit
Germany's 10 most Instagram-able places
15 pics that prove Germany is absolutely enchanting in autumn
10 German films you have to watch before you die
6 things about Munich that’ll stay with you forever
10 pieces of German slang you'll never learn in class
Ouch! Naked swimmer hospitalized after angler hooks his penis
Six reasons why Berlin is now known as 'the failed city'
15 tell-tale signs you’ll never quite master German
7 American habits that make Germans very, very uncomfortable
Story of a fugitive cow who outwitted police for weeks before capture
Eleven famous Germans with surnames that'll make your sides split
The best ways to get a visa as an American in Germany
jobs available
Toytown Germany
Germany's English-speaking crowd