FRANKFURT (Reuters) -- General Motors Co.'s ailing European unit Opel aims to strike a deal with labor unions to close the Bochum plant after production of the Zafira Tourer van ends in exchange for guaranteeing German jobs through to 2016.
Opel's management, the IG Metall trade union and the works council representatives of the German plants will continue negotiations in the coming weeks in order to reach an agreement over job cuts, wages, building a wider range of models, and a deeper expansion into export markets.
"We must work towards sustainable positive results for our operations in Germany," Opel CEO Karl-Friedrich Stracke said today in a statement.
"Opel needs to adjust its business in a way that enables profitability even in difficult market conditions. With 2012 industry volumes expected to be down 20 percent from demand in the past five years, waiting longer to act would be irresponsible."
The company said the goal is not just to reduce costs but "to lower the dependence on imported vehicles and parts."
Reuters reported on Tuesday that GM's board of directors was expected to decide on the closure of the Bochum plant as part of a business plan through 2016 that will be presented to Opel's top labor leadership on June 28.
Under the compromise, GM and Opel would be able to reduce its fixed cost base by letting Bochum wind down its production when the Zafira Tourer's life cycle ends, generally expected for the end of 2016.
While this would cost the jobs of 3,300 people currently employed in Bochum, management had relinquished considerations of ceasing production in 2015 when a current labor deal protecting the 20,000-odd German workers at Opel's three car plants and one component plant.
As part of the talks, IG Metall is prepared to discuss the "implementation" of the recent collective wage bargaining deal, which foresees hiking pay by 4.3 percent over a 13 month period retroactively from May.
Changing plans?
This would imply the union is prepared to accept a deviation from the industry-wide deal, either by paying less or delaying the date for the hike.
In doing so, labor hopes that the talks would allow job guarantees to be extended another two years through the end of 2016.
Opel reaffirmed plans to run all of its European plants in three-shift operation at full capacity. Company sources have confirmed that the company's cost base would ideally require it to build 500,000 more cars than it manufactured last year.
The carmaker pledged to look into shifting overseas production back to Europe. Opel currently imports the Antara sports utility vehicle from Korea, which will also begin exporting the smaller Mokka subcompact SUV to Europe come October.
The higher output in the remaining factories would mean roughly half of the planned investments through 2016 would be made in Germany, home to just over half of Opel's workforce.
On the right path
"Opel remains a central pillar of our global business and i am absolutely convinced that we are on the right path," GM Vice Chairman Stephen Girsky said in a statement.
Wolfgang Schaefer-Klug, Opel's top labor leader since January, expressed support for the deal, but said "many points still must be negotiated."
IG Metall boss Berthold Huber said the talks based on a preliminary plan showed both sides were accepting responsibility for the losses at Opel, which abandoned its plans to achieve profitability this year amid a severe drop in the market.
"We expect that the management of GM and Opel do not simply pay lip service to the plans but support them with the necessary investments," he said in the statement.
