GM to Halt Opel Production for 20 Days, Denies Drastic Cuts on Horizon

Opel will halt production at its two main production facilities in Germany, Russelheim and Kaiserslautern for 20 days in September following approval from IG Metall, the labor union representing Opel’s factory workforce, according to a Reuters report. The temporary closure is expected to save General Motors $50 million. GM’s European operations lost $747 million last year, and new car sales in Europe are still sluggish, forcing many manufacturers with European production operations to consider production and workforce cuts.

However, analysts say much more drastic cutbacks in workforce and plant capacity are needed to stabilize operations and ultimately return Opel to profitability in the face of much lower European sales. One plan reported by Germany’s Bild newspaper is the possible cut of as much as 30 percent of Opel’s workforce. The report was met with a quick and firm official denial from GM Europe and Opel, calling the report ‘irresponsible’ and that it ‘damages our brand.’ Opel’s current workforce totals approximately 40,000 employees.

GM and Opel are not alone in dealing with weak European sales and overcapacity. Ford is projected to lose more than $1 billion on its European operations for 2012, and cut production at its Cologne, Germany plant this summer, which affected 4000 workers.

Source: Reuters 1, 2