Bloomberg News

GM’s Opel to Shut Bochum Factory With 3,100 Jobs at Risk

December 10, 2012

GM’s Opel Decides to Shut Bochum Auto Factory in Germany in 2016

A car transporter loaded with Opel automobiles leaves the General Motor Co.'s Opel plant in Bochum. Photographer: Hannelore Foerster/Bloomberg

General Motors Co. (GM:US)’s Opel division will stop making cars at its plant in Bochum, Germany, in 2016, threatening 3,100 jobs, as the U.S. automaker seeks to stem European losses during a prolonged vehicle-market contraction.

Opel will end auto production at the factory when the current version of the Zafira minivan is replaced, the unit, based in the Frankfurt suburb of Ruesselsheim, said on its website. The carmaker will look to develop component and distribution operations at Bochum to limit job losses, it said.

The shutdown, the first of a car factory in Germany since World War II, is part of Detroit-based GM’s efforts to end losses by 2015 in Europe, where it’s forecasting a loss of as much as $1.8 billion in 2012 as industrywide sales fall a fifth consecutive year. The market decline has also prompted PSA Peugeot Citroen (UG) and Ford Motor Co. to announce car-factory closings in France, Belgium and the U.K.

“This is really the only step that’s open to them,” if Opel is to become profitable again, Erich Hauser, a London-based analyst at Credit Suisse, said by phone. “But at some stage the European market has to come back, so withdrawing capacity completely is probably not a good idea. They need to do what Ford has been doing, and reduce their cost base by moving capacity to places like Spain.”

Job Cuts

As of the third quarter of this year, GM’s European division, which also owns the Vauxhall car brand in the U.K., had lost $17.3 billion since 1999. The unit is eliminating 2,600 jobs across the region by the end of this year to reduce spending by $300 million, and has a target of cutting $500 million more in costs from 2013 through 2015, according to plans announced in late October.

GM shares (GM:US) traded in Europe declined less than 0.1 percent to $25.18 at 1:44 p.m. in Frankfurt. The stock in the U.S. has gained 24 percent this year.

The Bochum plant, in Germany’s industrial Ruhr valley, built 131,300 Astra cars and Zafiras in 2011, according to Opel’s website. The workforce at the site totals 4,500 employees, including 3,100 in car assembly, 300 in manufacturing auto components, 450 in replacement parts and 50 in vehicle transport, the works council said today.

Labor’s Push

Labor leaders have been trying to persuade Opel to build the Mokka compact sport-utility vehicle at Bochum, Rainer Einenkel, head of the plant’s works council, said at a press conference at the factory. Opel’s acting Chief Executive Officer Thomas Sedran, manufacturing chief Peter Thom and personnel head Holger Kimmes told employees of the shutdown plan at a meeting in Bochum today, Einenkel said.

“It was disappointing how they gave us the news,” he said. “On the one hand, they tell us they don’t need us any more, but on the other they say that they expect us to keep working hard and producing excellent cars for the next four years. That’s unprecedented.”

Germany’s government expressed “regret” at Opel’s decision.

“The anger of workers is understandable, since there have been some decisions by GM in the past that weren’t helpful -- access to certain markets, for example, but also treatment of employees that was anything but exemplary,” Holger Schlienkamp, a spokesman at the German Economy Ministry, said today at a Berlin press conference. “It’s up to Opel to reduce the negative consequences of the closing and take up its responsibility for the region.”

Spokesmen at Opel didn’t immediately answer phone calls seeking comment.

Market Forecast

The European Automobile Manufacturers Association lobby group is predicting the biggest car-market decline in almost two decades this year, with deliveries forecast to reach the lowest since 1995. Auto executives don’t expect sales in the region to recover before 2014 at the earliest, and have been looking at ways to cut capacity.

Peugeot, Europe’s second-biggest carmaker, plans to shut an auto factory in the Paris suburb of Aulnay in 2014 and focus production of small cars at a nearby plant in Poissy. The company said in July that its automotive unit had been burning through 200 million euros ($258 million) in cash monthly as sales dropped.

Ford (F:US) is shutting a Transit van chassis-cab plant in Southampton, England, and a stamping plant in Dagenham, on the outskirts of London, by mid-2013 and a car and minivan plant in Genk, Belgium, in late 2014. The Dearborn, Michigan-based company is forecasting European-division losses totaling $3 billion this year and next, and doesn’t expect a profit in the region before the middle of this decade.

Fiat SpA (F) closed a car plant on the Italian island of Sicily in late 2011. The Turin-based manufacturer, which is forecasting a loss at its European operations of 700 million euros this year, said on Dec. 7 that it will cut 1,500 jobs in Poland.

To contact the reporter on this story: Alex Webb in Bochum, Germany, via awebb25@bloomberg.net

To contact the editor responsible for this story: David Risser at drisser@bloomberg.net


Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW

Companies Mentioned

  • GM
    (General Motors Co)
    • $34.03 USD
    • 0.18
    • 0.53%
  • F
    (Ford Motor Co)
    • $16.58 USD
    • 0.05
    • 0.3%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus