Opel drama drags on. Forster out, Lutz in.

Posted by: David Welch on November 9, 2009

opel.jpg

The drama in Germany between General Motors and Europe just keeps dragging on. Now, its top European executive, Carl-Peter Forster, is leaving the company and GM Vice Chairman Bob Lutz will take over on an interim basis as Chairman of the company’s Supervisory Board. But it’s a non-executive post. Lutz won’t manage day-to-day workings.

This shouldn’t surprise anyone. Forster supported selling Opel to Magna and Russia’s OAO Sberbank, which GM management and the board opposed all along. Given his stance on the sale, it’s surprising that he has lasted this long. Sending Lutz to oversee Europe makes sense, since he spent a lot of time over there early in his tenure as GM’s new-car czar. His job was to get vehicle engineering in Germany mated to GM’s global product development works. He knows Opel’s inner workings.

But it’s obviously not a long-term solution. First of all, Lutz is supposed to be in the U.S. marketing GM’s new cars. Sparking sales in the U.S. remains GM’s biggest challenge. While critics have wondered aloud how a 77-year-old car guy can be a marketing maven, the 60-day money-back guarantee and “May the Best Car Win” campaign have increased brand consideration for GM. Market share has ticked up during the past couple of months. But the job is far from done. Lutz can’t manage Opel’s operations. He is too busy in the U.S.

More to the point, GM needs a German with good labor relations to run Opel. Right now, the German government and IG Metall, the labor union representing Opel’s workers, want nothing to do with GM management in Detroit. They don’t respect GM’s American executives. Lutz is Swiss German, but I scarcely believe they will view him much differently than they view the rest of American management.

GM could go hire a German. They did with Forster. But GM is having a tough time finding talent. Salaries are limited, there is no stock to give just yet, though the company can certainly promise to give share as it nears an IPO. But what’s it worth? And bonuses? Good luck with that. It amounts to a turnaround job with limited financial reward. On top of it, whoever takes that Opel job will have to win over an angry government and hostile union. GM has had trouble landing a new CFO to replace Ray Young in North America. Imagine the challenge of finding the right German executive to lead Opel.

Reader Comments

David

November 9, 2009 11:47 AM

I am really tired of hearing how upset the german government and the IG Metall Union are abut this. The reality is Magna would never been a long term solution to this and does any one really expect a company to part itself and then become a competitior? As far a the german track record goes they already destroyed Rover and all but killed Chrysler and British and Americans are not up in arms about this.

Brar

November 9, 2009 12:16 PM

"But GM is having a tough time finding talent. Salaries are limited, there is no stock to give just yet ..." Alright. How about promoting someone in-house? ... or is it that no one competent enough to take next higher responsibility is left in-house. If that's the case, whoever comes in will have to deal w/ nothing but dumb morons. I can't believe this to be the case, but than I have never run a car company(...into ground like Wagoner)?.

Alasdair MacConachie

November 9, 2009 2:40 PM

GM's retaining their European Operations is great news.
There has been enough uncertanty - so lets GRIP the situation and refocus doing what we are good at - selling our excelleant range of cars.
Alasdair MacConachie - UK Rerailer

Kinzan

November 9, 2009 3:57 PM

I concur that GM was right in retaining OPEL & Vauxhall. As for executives, between all the so-called layoffs in industry, isn't there someone who can take on the job. What about a Vauxhall executive, Mr. Alasdair MacConachie. I've heard that Vauxhall is doing better in Britain than Opel is in Germany. GM needs to tell Germany that letting Russia into Opel would have destroyed it completely. The world is changing and Germany must recognze this. GM might want to tell Germany that some guy in Italy by the name of Sergio would like to add Opel to his chain of auto companies - I'm starting to like that guy, a lot of Jack Welch in him. (Hey, is Jack available; if not, Larry Bossidy?)

Sven Mueller

November 9, 2009 5:32 PM


It was truly sad to watch the German government put in so much work and money to help automobile relic GM. For centuries the cooperation did not work. The European automobile market is much more competitive and advanced in terms of quality and innovation than the U.S. counterpart. And for centuries GM has been trying to keep Opel as short on investments as possible. No wonder, the money was needed in the home market, where GM has been losing ground ever since when - the 70s? Opel is indeed the pearl of GM even though within the European market Opel itself has been struggling. Throughout the recent months, GM has been aware that if there is a future for GM at all, it can only be Opel.

Carl

November 10, 2009 6:26 AM

Obviously some people are not well informed.

GM Europe only exists because of the German Government! They provided the loan, the first scrappage scheme and provided security for the suppliers.

The GM top management discredited itself when threating to let GM Europe go into insolvence. They forgot that GM Europe is then owned by 65% from the German Government - hey what a threat! They would be out in such a case.
The same applies if they don`t pay back the money by end of this month.

So it`s not about a single top Manager...whoever it is nobody wants to hear or drive the rubbish out of Detroit...

On another subject:
Rover was ruined by itself long ago.
Chrysler as well.
BMW and Daimler-Benz at least could save a bit and both lost a lot of money!

Engineering in Germany has another status than in the UK or US.
In the US you have to be a lawyer out of Harvard to lead banking or industry.

Have you watched the latest troubled industries? US and UK banks plus US owned Automotive - why?

Drew

November 10, 2009 6:56 AM

When is Opel finally going to decide / do something, instead of just procrastinating / waivering and contradicting itself?
If this is the way GM cars are designed / made, the wheels will fall off it before you have done even a thousand miles with them.
Maybe GM could send its top 'management' team to Ford for a management trainee course.

Carl

November 10, 2009 9:30 AM

Ford is the same - wasted money all along.

Looking at their strategy - buying Aston Martin, Volvo, Land Rover, Think. Then they are forced to sell them at huge loss.

Volvo alone will have cost them USD5Bio.
All in all their hugely successful strategy will have wasted at least USD20Bio in less than 10 years.

Additionally they received US Goverment money - about USD2Bio for "re-tooling".

I don`t call this an excellent management, they were just more lucky that they could still organize their debt problem in the good times before the crash...

In another 10years they will be history as well...

Ballbuster

November 11, 2009 1:25 AM

No reasonable person can imagine Lutz as the leader, the Fuehrer, of Opel in Deutschland. As the hand-picked right hand man of Captain Rick Wagoner, Lutz abandoned command as soon as the ship listed toward bankruptcy. Lutz's explanation for his early exit was that he wanted to do something different in his remaining years. However, as soon as the new GM emerged from bankruptcy Lutz dived into GM's penthouse faster than a blitzkrieg Stuka flugzeug. Despite Lutz's run-and-hide propensity, the grand old-boy network in Detroit think Lutz is uber alles. Das Stimmt! Aber the German und American people wollen nicht vergessen.

Sven

November 11, 2009 6:07 PM

Car is right about the threat that is not really one. If Opel goes bankrupt, then Germany will own the majority. The same happens if GM does not pay back the money. What GM is very likely to do is trying to play the European factories off against each other in order to get cost as low as possible. This however is not how you build quality cars for the most competitive of auto markets.

You know what? If Opel somehow could have bought GM and manage the giant the Opel way, the Forster way, that would have made a future...

Post a comment

 

About

Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

BW Mall - Sponsored Links

Buy a link now!