Job cuts will be handled in a "socially responsible way," promises GM Vice Chairman Steve Girsky.
Despite resistance from unions and political leaders, General Motors will move ahead with plans to close an excess assembly plant in Germany, a move seen as critical to the maker’s long-awaited turnaround in the troubled European market.
The news could impact about 3,000 of GM’s 20,000 German employees – but the maker said it will handle the anticipated job cuts in a “socially responsible way.” The question still lingering is whether additional plant closings and job cuts will be necessary to right GM’s floundering Opel subsidiary.
In a statement, the maker stressed that “The main reasons” for the closure of the Bochum assembly plant “are the dramatic declines in the European car market and the enormous overcapacity in the entire European auto industry.”
GM recently forecast its European operations will end the year with a deficit of between $1.5 billion and $1.8 billion, the 13th consecutive annual loss. The maker came close to selling the Opel subsidiary off shortly after its 2009 bankruptcy and a number of analysts have recently suggested GM reconsider the idea of finding a buyer.
The Bochum plant will not cease operations until 2016, when production of the Opel Zafira Tourer reaches the end of its lifecycle, which underscores concerns about the slow pace of the turnaround plan envisioned by GM Vice Chairman Steve Girsky, who also serves as chairman of Opel’s board of directors.
Even this closure, however, required extensive negotiations to enact, raising doubts union leaders would approve the shuttering of another German facility. In fact, Opel hopes to use buyouts or transfers to avoid forced layoffs as Bochum operations come to a close, Girsky saying the goal is to “implement still-necessary job reductions in the most socially responsible way.”
A GM warehouse in Bochum will continue operating after the closure of the assembly plant and some employees may find new work if GM transfers some component production operations there.
“We have the clear intention to secure a significant number of Opel jobs (in Bochum), in the warehouse and possibly in component manufacturing,” said Girsky.
Few were surprised by today’s announcement – including workers at Bochum. After years of inertia, the European auto industry is beginning to move forward with much-needed capacity reductions, analysts have suggested. By general consensus, there are currently about eight more assembly plants than necessary on the Continent.
Until recently, no one seemed willing to take the first step, however, complained Sergio Marchionne, the CEO of the Fiat/Chrysler alliance and head of a European automotive industry steering group.
That is beginning to change, however. Fiat recently closed a facility on the island of Sicily. And both Ford and French carmaker PSA Renault Citroen now plan additional closures. But Bochum will be the first auto assembly plant closure in Germany in decades.