The Bochum, Germany plant, which produced the Opel Zafira, is slated to close by the end of the year.
General Motors has taken a critical step in the restructuring of Opel by agreeing to spend $750 million on severance and retirement packages for 3,300 members of the IG Metal, the German metalworkers union.
Opel sits at the heart of GM Europe and the restructuring is necessary to end a string of losses that reaches all the way back to the late 1990s, GM officials said. GM Europe is expected to lose money again this year, but could finally post a profit in 2015.
Representatives of Opel and IG Metall have negotiated an agreement for the approximately 3,300 employees at a plant in Bochum, Germany, which is due to shutdown permanently by the end of the year.
The total cost of severance packages and additional payments negotiated between the company and the union are expected to reach about $165,000 for each worker who will lose their job, making it one of the most expensive shutdown agreements in automotive history.
In addition, the package also included an early retirement scheme for older employees and support for younger workers seeking jobs elsewhere. However, German media suggested the settlement wasn’t rich enough.
Meanwhile, GM officials insist Opel’s fortunes are looking up.
“In Europe, the team is doing a great job and our relentless drive to strengthen the Opel brand is accelerating our turnaround,” GM chief executive Mary Barra told shareholders last week.
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So far this years, Opel has increased sales across Europe, according to preliminary figures. From January through May, Opel new vehicle registrations increased by 3.6% to 454,807 units versus the same year-ago period, representing a 5.77% share of the overall vehicle market in Europe. In May Opel sold 95,143 units, and market share climbed to 5.96%.
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In the first five months, Opel gained market share in 10 European countries, including Germany, where market share rose to 6.88% of the total vehicle market over the first five months. In May alone, market share reached 7.26%.
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“Our models are extremely popular, and we benefit from this in many European markets that are once again growing. This is also reflected in the order books,” Peter Christian Küspert, Opel’s director of sales.
In addition, Vauxhall, GM’s other European brand, also defended its position as the second-largest brand in the first five months of 2014.