GM’s Opel Asks Union for Wage Boost Delay to Avoid Cuts

GM Moves to Close Plant
A red road traffic light is seen near the General Motor Co.'s Opel plant in Bochum, Germany. Photographer: Hannelore Foerster/Bloomberg

General Motors Co. moved to close an Opel factory at the end of 2016 in what would be the first shuttering of a German auto plant since World War II.

“Under the current economic conditions and outlook, there will be no further product allocation for Bochum after the Zafira goes out of production,” Doris Klose, an Opel spokeswoman, said by telephone.

Auto CEOs meeting in Madrid tomorrow will discuss how to deal with the growing overcapacity as the region’s car sales sink for a fifth straight year. Auto factory shutdowns in Europe are rare, this would be the third one since 2008, and the first in Germany among existing carmakers since 1945, according to industry expert Ferdinand Dudenhoeffer.

”They are trying to push back a decision which would cause permanent damage to the perception and sales of Opel cars in Germany,” Dudenhoeffer, the director of the Center for Automotive Research at the University of Duisburg-Essen, said of the delayed closure. ”It offers very little comfort.” Opel is in negotiations with unions to keep the plant in Bochum, Germany, open until GM stops making the Zafira minivan at the factory at the end of 2016, the Ruesselsheim, Germany-based GM unit said today in an e-mailed statement. Opel would extend job protections by two years through 2016 and in exchange ask workers to delay wage increases set for this year.

European Losses

GM, the world’s largest automaker, is looking to consolidate European operations to curb losses that Chief Executive Officer Dan Akerson has said is weighing on the company’s shares. The Detroit-based company posted a first-quarter adjusted operating loss in Europe of $256 million and also had $590 million in writedowns. GM Europe has reported $16.4 billion in losses since 1999.

“I’ve been telling clients not to expect anything dramatically positive for GM Europe at least for several years,” David Whiston, an equity analyst with Morningstar Inc. in Chicago, said in a telephone interview. “This doesn’t give me any reason to be dramatically more optimistic about GM Europe than before this news.”

GM dropped as much as 27 cents, or 1.2 percent to $21.90 and was down 0.9 percent as of 1:11 p.m. in New York trading.

Overcapacity in Western Europe may more than double to about 2 million vehicles in 2012, according to IHS Automotive. The region’s car market will contract 7 percent this year, the European Automobile Manufactuers’ Association said last week.

Factory Closings

Fiat was the first European automaker to close a factory in its home country since the 2008 financial crisis when it shut a plant in Sicily in December. Before Fiat’s move, GM was the only other carmaker to shut a factory in the region past four years, closing a facility in Antwerp, Belgium, in 2010.

Bochum, which produced its first Opel vehicle in 1962, has 3,100 employees, down from a peak of more than 20,100 in 1979, according to company figures.

GM said May 17 that it will move production of the next version of the Opel Astra compact car to its plant in Ellesmere Port, England, raising the possibility of a shutdown of the Bochum factory. Astra output will be moved from Ruesselsheim, a plant that will remain in full use, according to the company.

GM’s remaining European factories will work on a three-shift basis and may eventually produce non-Opel vehicles, the carmaker said today.

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