General Motors’ Opel managers will present a business plan next Wednesday to the board that likely will involve closing two factories in Europe to reduce overcapacity.
The factories in Ellesmere Port in the U.K and Bochum in Germany are particularly at risk according to German newspaper Handelsblatt . GM could finalize the plans to shut down the operations and announce them in the next couple of weeks, the paper said.
“GM has been saying repeatedly that, with excess capacity equivalent to 500,000 cars annually, we have two plants too many and the new head of manufacturing has been visiting one site after the other, playing them off against each other,” said one supervisory board member from the Labor side, who asked not to be identified.
“Business in Europe is pretty dire for the industry overall at the moment and there’s no end in sight. When it’s this bad you have to take action, so it’s not so much what we want or what the unions want – it’s the environment that is driving this,” the company source said.
“It doesn’t allow much more time to lose.”
GM, which has incurred more than $14 billion in losses in Europe since 1999, has come to the conclusion that plant closings are necessary to return its European operations to profitability.
It sees the region’s mass-market auto manufacturers burdened by excess production capacity, estimated at around 20%, slack demand, and fierce competition.
Auto sales in Western Europe are down 14% since 2007. In that time, among current European auto makers only GM and Italy’s Fiat SpA have closed a factory, one apiece.