Life after GM

Peugeot pressures Opel to save on costs

Jahresrückblick 2017
No good tidings for Opel staff. Source: Andreas Arnold/dpa

Despite the swirling snow outside, the boardrooms of German carmaker Opel are tangibly devoid of Christmas cheer right now. Since mid-November, new CEO Michael Lohscheller has been holding regular talks with the company’s works council about cutting employee hours. He’s pushing for an agreement before the holidays, and according to inside sources, there’s tension in the air.

The screws are getting turned on Opel by PSA Group, the French maker of Peugeot and Citröen cars that bought the company from its former American parent General Motors four months ago. Handelsblatt has learned that Opel is set to lose hundreds of millions of euros this year, marking yet another year in the red. Since 1999, it has accumulated losses of about €19 billion ($22 billion).

Announced last month, Mr. Lohscheller’s strategic plan, PACE!, aims to return Opel to profitability by 2020, by combining operations with parent company PSA, and offering electric models of all its cars by 2024. But part of that plan includes cutting personnel hours.

“Opel has to change itself,” wrote Mr. Lohscheller in an internal message to some employees, as seen by Handelsblatt. “It can’t go any other way. We are not capable of competing yet.”

If the CEO cannot find a solution with the works council soon, it could mean much worse than a knuckle rapping from PSA’s Paris headquarters. The affiliated group might then step in and push for severe downsizing. Opel has about 19,000 employees in Germany, and twice that in Europe.

Around 4,000 to 6,000, or as much as 30 percent, of jobs are expected to change over.

In Rüsselsheim’s technical development division, engineers working 40-hour work weeks will soon see a reduction to 35 hours. The affiliated group will take over the brunt of such work in the future to save money.

Older employees will be particularly affected. Mr. Lohscheller has spoken of cuts “within the framework of a responsible personnel policy”. What he means is partial retirement.

Opel might look to German competitor Volkswagen for inspiration. VW hopes to transition 23,000-some jobs into partial retirement by 2020. If much smaller Opel followed a similar model, around 4,000 to 6,000, or as much as 15 percent, of jobs could be axed.

Mr. Lohscheller has so far spoken vehemently against closing an entire factory. In 2014, Opel closed its Bochum plant, once a powerhouse employing 22,000 people in its heyday. The Ruhr area city, which was fighting high unemployment, still has not forgotten.

But reducing hours won’t be enough; Opel will certainly be looking to economize in other ways.

Stefan Menzel writes about the auto industry. Barbara Woolsey, an editor in Berlin, adapted this article for Handelsblatt Global. To contact the author: menzel@handelsblatt.com

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!