Automotive Industry: General Motors' Opel Cuts Hours

Troubled German carmaker Opel said it will slash working hours as European demand for cars hits the skids. Out of a total 22,100 people who work at Opel's four production plants in Germany -- Ruesselsheim, Kaiserslautern, Bochum and Eisenach -- around 9,300, or just under half, will be affected, Opel announced.

Troubled German carmaker Opel, under pressure from parent General Motors Co. (IW 1000/12) to return to profit, said it will slash working hours as European demand for cars hits the skids.

"In consultation with the works council and the IG Metall labor union, Adam Opel AG will introduce short-time work at its plants in Ruesselsheim and Kaiserslautern from September," Opel said in a statement, adding that 20 working days will be cut between then and the end of the year.

"The European car market is dropping dramatically," complained Opel, which is celebrating its 150th anniversary this year.

Personnel chief Holger Kimmes said previous measures such as flextime will no longer compensate for the drop in capacity utilization and "short-time work is the right way to bridge this weakness in the market."

Under short-time work schemes, employees see their working hours reduced for a limited period, but the state, in the form of the Federal Labor Agency, partially makes up for the corresponding shortfall in pay.

The measure was used widely by German companies, including Opel, during the crisis of 2008-2009, and helped avoid widespread layoffs and allowed companies to ramp their operations up again quickly when demand recovered.

Out of a total 22,100 people who work at Opel's four production plants in Germany -- Ruesselsheim, Kaiserslautern, Bochum and Eisenach -- around 9,300, or just under half, will be affected, Opel announced.

General works council chief Wolfgang Schaefer-Klug said the measure will "secure jobs" and help limit financial hardship for employees.

It will affect both workers on the production lines, as well as those in administration. By contrast, employees in the engineering activities will not be hit.

Ruesselsheim employs a workforce of 13,800, with 3,500 in production, 3,300 in administration and a further 7,000 in engineering, while the Kaiserslautern plant, which makes components, employs a workforce of 2,500.

GM sustained a loss of $400 million (320 million euros) from its European operations in the second quarter of this year, as the unit battles with the eurozone sovereign-debt crisis and massive overcapacity issues.

Other carmakers, such as Volkswagen AG (IW 1000/10), BMW AG (IW 1000/36) and Daimler AG (IW 1000/18), are faring much better, thanks to the higher-range models and their solid presence in emerging markets such as China, where Opel has no presence.

A recent study by the Center for Automotive Research at the University of Duisburg-Essen calculated that Opel lost 938 euros for every car sold in the first six months of this year, compared with 789 euros for French automaker PSA Peugeot Citroen (IW 1000/47), 583 euros for Ford Europe and 142 euros for Fiat SpA (IW 1000/48).

Renault, on the other hand, made a small profit of 65 euros per car, the study found.

At the end of June, Opel's supervisory board approved deep restructuring, massive investment in the product range of the Opel and Vauxhall brands, and a new marketing strategy.

GM, losing patience with its German subsidiary, ejected Opel CEO Karl-Friedrich Stracke in July after just 15 months at the wheel.

While unions are trying to secure a deal that there will be no redundancies and no plant closures in Germany until 2016, 8,000 jobs are being axed in Europe and the group's plant in Antwerp is being shut down.

There has been repeated speculation that the carmaker's site in Bochum in northwest Germany also is a candidate for closure.

Copyright Agence France-Presse, 2012

Simon Morgan, AFP

TAGS: Leadership
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