GM’s Opel to Close Antwerp, Belgium Plant
By Chris Haak
Brace yourselves for a series of protests, back-room dealings, offers of state aid, and more. GM Europe CEO Nick Reilly announced today that the company is closing its Antwerp, Belgium assembly plant within the next several months. The plant currently produces the Opel Astra three-door hatchback, five-door station wagon and Astra TwinTop coupe cabriolet and made 88,873 Astras in 2009. Also of note to our US readers, the Saturn-badged previous-generation Astra that lived so briefly in Saturn’s US lineup was produced at this plant.
The Antwerp facility currently employs 2,606 people, which represents about five percent of GM Europe’s workforce. Reilly has previously said that the company needs to slash about 8,300 jobs to reduce its overcapacity, which leaves 5,700 more cuts still to come, assuming the plant closes as expected. Further, 4,000 job cuts are expected in Opel’s Germany workforce, which leaves another 1,700 to go elsewhere in Europe.
Opel/Vauxhall also needs about 2.7 billion Euros in European state aid to survive. According to Reilly, though he has nothing to announce on that front at the moment, talks are occurring and they have made “good progress.” Too, GM has loaned Opel 650 million Euros earlier this month to prepay for certain engineering services as it works to woo government assistance.
The closure of the Belgium plant will still not solve Opel’s overcapacity problems, to say nothing of Europe’s chronic auto industry overcapacity problem. In contrast to the US, where plants have been shuttered at a breakneck pace over the past decade, auto-plant closures are rare in Europe. Rather than closing a plant, the more typical pattern has been to reduce its output (and therefore work hours of its employees) while propping it up with – you guessed it – government aid.
Opel projects that the new-car market in Western Europe will be about 12.1 million units in 2010, which is 1.5 million units below the 13.6 million unit level of 2009 (supported largely by scrappage schemes in many European countries) and about 4 million units below the roughly 16 million new vehicles sold in the peak year of 2007.
Applying a further Band-Aid to overcapacity, Opel expects to reduce the work hours of nearly half of its 25,000 employees in Germany during 2010 to reduce capacity.
Losing one’s job is a painful experience, but collectively, there remains too much capacity in Europe, and that does not bode well for companies that produce mass-market vehicles on the Continent. BMW, Mercedes-Benz, and Audi can hide some of their costs in their higher transaction prices, but the likes of VW, Ford, and Opel don’t have that luxury.
There’s also the possibility that this may be little more than GM forcing the hands of its unions and the governments of the countries in which it has plants. Reilly noted during the news conference announcing the closure that Opel will stop production there in the next few months, and will eventually sell the land that the factory occupies.
He also left open the possibility of alternatives to closing the plant in short order, saying that the closure could be completed by June or July, unless an alternative can be found through negotiations with unions. Reilly also mentioned that GM has tried to find an alternative to closing the plant and was unsuccessful. Reading between the lines, it sounds like if Opel received enough concessions from unions and aid from Belgium, the plant could potentially be saved.
Spokesperson Jan Van Aggelpoel of the ACV union sounded more sanguine than belligerent when discussing Antwerp’s prospects. “We remain open until June 2010. Afterwards we will have to see what the possibilities might be. Otherwise, it’s the end.”
Stories like this never end with the first press conference, particularly when activist governments and organized labor are involved. Stay tuned.
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