General Motors Co. said on Tuesday it may close a German factory at its Adam Opel GmbH subsidiary earlier than proposed, adding that restructuring talks with unions must be wrapped up by February, as the U.S. car maker seeks deep cuts to save its ailing brand.
Raising the pressure on its more than 20,000 workers in Germany, GM vice-chairman Stephen Girsky said the company would carry out its original plan to shut production down at the northwestern Bochum plant as soon as the current contract permits, should talks collapse.
“I have asked the Opel management and labour to reach a solution in February. Our Germany Plan must then be finalized,” Mr. Girsky told employees on Tuesday in a letter obtained by Reuters.
“The (current) contract expires at the end of 2014. Production of the Zafira in Bochum would then end and all assembly cease as of Jan. 1, 2015,” Mr. Girsky wrote in the letter, which was verified by General Motors.
It is the first time the company has issued a specific time frame for a deal in negotiations between Opel management and its German work force. The talks, which have dragged on since last June, were agreed on the basis that management wanted to close Bochum when the current life cycle of the Zafira Tourer MPV ends – largely considered to be toward the end of 2016.
GM’s European operation, which consists mainly of Opel and U.K.-based Vauxhall following the sale of Saab to Spyker in 2010, has racked up around $16-billion (U.S.) in losses since 2000 owing to uncompetitive models, a sickly brand image and more recently a sharp plunge in the European car market.
This has prompted analysts to call for Opel to be sold almost at any cost and triggered speculation that GM is working behind the scenes to offload Opel onto its French partner PSA Peugeot Citroën, which is itself struggling to find sufficient economies of scale to stay afloat.
The Opel works council in Germany and IG Metall trade union negotiator said in response to Mr. Girsky: “The threat to cease all production in Bochum at the start of 2015 is unacceptable.”
A spokesman for Opel said it was for the work force to decide whether it would take up an offer tabled by management to maintain production past 2014. GM is demanding that Opel staff wages in Germany be frozen until the unit returns to profit.
“Ahead of today’s negotiations in Bochum, the first since December’s announcement, Steve Girsky appealed to staff to join company efforts in guaranteeing that Bochum has a future after 2016, even if it is not with Opel,” the spokesman said.
Mr. Girsky said management would not budge from its plans to close Bochum and cut some 3,000 jobs there, regardless of work force and union proposals to build the next-generation Mokka subcompact SUV at the plant, which sits astride an abandoned coal mine in an economically depressed area in northwestern Germany.
“The situation in the entire European (car) market is still catastrophic,” Mr. Girsky wrote in the letter. “That’s a difficult precondition for forthcoming negotiations” with German staff.
GM forecast Opel will have lost $1.5-billion and $1.8-billion last year, with only a slight improvement expected for this one. Detroit has pushed back the break-even point, initially expected two years ago, to the middle of the decade.
IG Metall said it could not agree to GM’s freezing wages for a sustained period of time, since this would grant preferential treatment to one company over all the other goods manufacturers in Germany that are bound by industry-wide wage agreements.
“For this reason IG Metall cannot and will not ever agree to that,” they wrote in the statement.
IG Metall has long warned that GM’s rounds of restructuring at Opel only serve to further weaken the ailing subsidiary and widen the already substantial gap between it and Volkswagen AG in Germany.
VW only once resorted to large-scale job cuts in Germany, in 2006, and its domestic staff has almost returned to the previous size of roughly 100,000 workers as its strong brand and diversified model lineup help it take share from competitors such as Opel and Peugeot.