GM Europe faces cuts

General Motor’s European arm is facing major job cuts and even entire plant closures as company bosses race to stem the huge losses being suffered by the Opel and Vauxhall divisions.

US-based city analysts are predicting that as many as 4000 jobs could be cut over the next two years. Closing a factory cannot be ruled out, according to industry experts, with Opel’s German Bochum plant most vulnerable on paper.

GM Europe lost around £450m in 2011 after losing £1.2bn in 2010. According to news agency reports, two US-based analysts are predicting that that GM will have to spend between £600m and £760m on ‘restructuring’ Opel-Vauxhall in an attempt to stem the losses.

Dan Akerson, GM’s CEO, said last week that Opel-Vauxhall production collapsed 20 percent in the last three months of 2011, a reflection of impact the crisis around the Euro is having on consumer confidence. With European car sales likely to continue to be weak in 2012, GM bosses will have to move quickly to prevent another year of huge losses.

Akerson told city analysts that he expected a concrete plan to emerge ‘in the next couple of months’ after talks with Unions and works councils, but admitted that a reduction in capacity at GM Europe’s factories was a virtual-certainty. Opel-Vauxhall sales fell 20 per cent in January this year so GM bosses will be racing to reduce excess production capacity to meet the EU sales collapse.

Akerson has said that he wants to hit 100 per cent capacity utilisation, which makes a factory closure more likely. However, GM is likely to face serious opposition to closure of Bochum, which is less productive than Vauxhall’s Ellesmere plant in the UK but also likely to be defended vigorously by powerful German unions. Plans to build Chevrolet models in European factories to increase capacity utilisation are also possible.

Hilton Holloway