GM's New Opel Boss Gets Chance to Shine

Longtime GM insider Nick Reilly, the new acting head of its German unit, faces an almost unimaginably tough job. But he has experience with turnarounds

By Seonjin Cha and Chris Reiter

(Bloomberg)—Nick Reilly took over at Adam Opel GmbH in Germany five days after 10,000 people demonstrated against General Motors Co.'s ownership of the unit. It wasn't the first time GM had asked him to win over protesters.

Reilly, 59, became acting head of Opel on Nov. 10 after GM scrapped a sale of the Ruesselsheim, Germany-based unit to Magna International Inc. Unions had backed the deal as workers would get a 10 percent stake. GM's acting Chief Executive Officer Ed Whitacre made the appointment permanent on Dec. 4.

To turn Opel around, Reilly, a 34-year GM veteran, has to persuade workers to give up 265 million euros ($394 million) in annual pay and get seven European Union countries to provide 2.7 billion euros of support. He also has to stem a 9.6 percent slump in sales of Astra and Corsa cars as the automaker is set to run out of cash by March.

Fixing the carmaker is "all about regenerating team spirit and a determination to win," Reilly said in an e-mail response to questions. Opel has "a very robust product portfolio."

Reilly, who previously managed all of GM's international operations from Shanghai, oversaw the carmaker's 2002 purchase of South Korean plants in a deal also opposed by unions. As head of GM Daewoo Auto & Technology Co., he more than tripled annual sales to 1.5 million vehicles by the end of 2006. The unit, built from a formally bankrupt carmaker, now accounts for about 20 percent of GM's global production.

Opel Job Cuts

"GM counts on Reilly to be one of the leaders to turn around the whole company," said Michael Dunne, president of consultant Dunne & Co. and ex-head of J.D. Power & Associates in China. "His appointment to make sure the Opel deal works is an indication of how much confidence GM has in him."

At Opel, Reilly expects to cut about 8,300 jobs under an almost-completed turnaround plan, he said in a Dec. 5 conference call. Success will require developing a new "mini" car, as well as hybrid and gas-powered vehicles, he said.

The unit has been losing market share since the mid-1990s, "due to cheap manufacturing and cheap parts, hurting its reputation" said Christoph Stuermer, an analyst with research firm IHS Global Insight in Frankfurt. If Reilly thinks "it's a problem of scale—selling more cars and saving a bit more—then he doesn't understand the structural problems."

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