Bloomberg News

Opel Workers Approve Pay Freeze as Ford Settles Genk Plan

March 15, 2013

General Motors Co. (GM:US) and Ford Motor Co. (F:US), the two biggest U.S. carmakers, won employees’ approval in Europe for labor-cost cut plans to restore earnings in the region in response to a recession that’s reducing vehicle sales.

Manufacturing workers at Ford’s plant in Genk, Belgium, and its suppliers will end walkouts after agreeing to severance packages of as much as 2 1/2 years of pay when the factory shuts in 2014, the company said today in a statement. A pay freeze at GM’s Opel brand in Germany received the backing of employees at three of the unit’s five plants, the IG Metall union said separately.

Industrywide European car sales are set to fall a sixth consecutive year in 2013 after reaching a 17-year low in 2012 as a sovereign-debt crisis grips the region. The 4,300 positions that Ford is cutting at Genk are part of a combined 30,000-job reduction outlined since mid-2012 by auto manufacturers such as PSA Peugeot Citroen, Renault SA (RNO) and Opel.

“We are pleased to have reached a social plan agreement that was accepted by the unions and approved by the hourly employees at Genk,” Philippe Verbeeck, operations manager for Ford at the plant, said in the statement. “We fully recognize that this has been a difficult time for everyone at the Ford Genk plant, our suppliers and the local community.”

Genk Halted

Production at the Belgian factory has been halted by labor disputes, including strikes by workers at component makers, since Dearborn, Michigan-based Ford announced plans in October to shutter the site and and two plants in the U.K. The carmaker plans on March 18 to restart assembly lines at Genk, which produces the Mondeo mid-size car, S-Max wagon and Galaxy minivan. Talks with salaried employees on their severance terms are continuing, Ford said.

Opel workers at the GM division’s plants in Ruesselsheim, Kaiserslautern and Dudenhofen voted with majorities exceeding 83 percent to keep pay at current levels through 2015 in exchange for securing their jobs. Workers in Eisenach will vote in the coming days, while negotiations at the plant in Bochum, where vehicle production is scheduled to end in 2016, are continuing, IG Metall said.

“A negative vote, or a lack of a resolution in Bochum, doesn’t mean that the contract can’t be implemented at the other sites,” IG Metall district leader Armin Schild said in the statement.

GM Europe, which includes Ruesselsheim-based Opel and the Luton, England-based Vauxhall brand, has lost $18 billion since 1999, including a $1.8 billion deficit last year. Ford lost $1.5 billion in Europe in 2012, and expects the figure to widen to $2 billion this year.

Bochum’s Conversion

Opel has laid out plans to convert the plant in Bochum to a parts-production and logistics operation, which would secure 1,200 of the more than 3,000 jobs at the site. Rainer Einenkel, head of the plant’s works council, said on March 1 that he didn’t support the broader labor agreement with Opel management.

GM Europe has a target of improving earnings this year, helped by new models such as the Mokka compact sport-utility vehicle and Adam city car, and aims to break even by 2015. Opel, led by former Volkswagen AG (VOW) manager Karl-Thomas Neumann since the beginning of this month, will refrain from mass firings to reduce the 20,000-employee workforce in Germany under the pay- freeze agreement.

Steve Girsky, the GM vice chairman in charge of European operations on an interim basis until Neumann took over, threatened in January to close the Bochum assembly plant by the beginning of 2015 if the Opel employees didn’t agree to concessions. Girsky has said repeatedly that Detroit-based GM supports Opel’s turnaround plan.

Renault, France’s second-biggest auto manufacturer, agreed with labor leaders on March 13 on cutting its domestic workforce by 17 percent and freezing pay in exchange for a pledge not to close plants for three years. Larger Paris-based competitor Peugeot (UG) is also seeking a 17 percent reduction in jobs at its French plants, including 3,000 posts that disappearing when it closes a factory in Aulnay in late 2014.

To contact the reporters on this story: Dorothee Tschampa in Hanover, Germany at dtschampa@bloomberg.net; Chris Reiter in Berlin at creiter2@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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