GM Opel plant closure delay shows lack of European urgency

Opel’s decision to put off for one year the possible closure of a plant in Germany underlines the lack of urgency being shown by ailing European manufacturers, according to Deutsche Bank.
Europe’s non-German mass car makers Renault and Peugeot-Citroen of France, Fiat of Italy, and the U.S. transplants Ford and GM’s Opel-Vauxhall are losing money as sales slide, but they are also being hamstrung by operating inefficient plants and an inability to shut them because of union and government pressure. German manufacturers like Volkswagen and its Audi upmarket subsidiary, BMW and Mercedes, took tough restructuring measures after the financial crash of 2009.
On Wednesday, GM Europe said it is negotiating with the unions to shut its Bochum, Germany plant in 2016, a year later than expected. The Bochum plant makes the Opel-Vauxhall Zafira minivan.
Deutsche Bank analyst Rod Lache said even though it was unlikely that GM could have been more aggressive because of agreements with the unions, markets had expected a bit more action.
This doesn’t augur well for those expecting game-changing moves soon.
“The fact that GM, who appeared to be one of the most aggressive manufacturers in pushing for capacity reductions, was not able to accelerate plant closures suggests to us that a substantial European industry restructuring is unlikely in the medium term, unless the current environment were to deteriorate substantially,” Lache said.
At the Geneva Car Show in March, Renault-Nissan CEO Carlos Ghosn said everybody knows drastic action and closures are called for.
“All have capacity problems. When one starts, the others will be forced to follow. You have to look at who needs it the most, then everyone will follow them,” Ghosn said.
It looks like the industry still awaits the first trigger for action.
GM Europe and the German unions said on Thursday they would negotiate a definitive plan to restructure their money-munching operation by November.
GM Europe’s Opel-Vauxhall subsidiary has lost about $12.4 billion in Europe since 2000, $747 million last year, and $256 million in 2012’s first quarter. One investment banker expects it to lose another $1.5 billion in 2012.