Opel may cut jobs, capacity in Europe image

While the U.S. auto giant has made a comeback at home, its European operations, focused on the Opel and Vauxhall brands, have sagged amid high costs, tough competition and the weak EU economy.

Last month, General Motors reported that its European division had posted a US$747 million loss before interest and taxes. While that’s an improvement over the US$1.95 billion losses the company reported in 2010, in the past 13 years Opel and sister company Vauxhall have cost GM US$15.6 billion.

Now, General Motors Co.’s top financial executives were quoted by analysts as saying Europe remains a challenge, with vehicle prices falling, and the automaker may need to turn to shortened work weeks and job cuts to trim costs as it waits for the industry to close plants.

In addition, the alliance with French peer PSA Peugeot Citroen is just one part of GM’s plan to fix its loss-making Opel unit, vice-chairman Steve Girsky said.

So what’s next?
The main problem is that last year Opel used just 67 percent of its installed capacity. The German automaker has too much capacity; and since the European market is not expected to rebound until 2015 the only way it to cut hard.

Last year Opel closed its Antwerp plant in Belgium. In addition, this year the fate of 2,100 British workers will be decided by the end of April, as bosses at General Motors decide whether or not to shut down Vauxhall’s Ellesmere Port plant imminently.

According to a report in The Sun, the decision is a straight one between closing the UK factory and a German plant – the Opel facility in Bochum.

However the British Business Secretary, who was also at Geneva, said he believed GM had still not made up its mind about the future of Ellesmere Port and its other European plants in Germany, Poland and Spain.

Mr Cable added: “The British Government has been very supportive of General Motors.

“They have a serious problem when it comes to capacity and they have to make a decision.

“We have made the argument that the UK is a good place to be.”

One thing is clear – GM will have to close some plants this year…