General Motors seeks solution to keep Opel’s Antwerp plant open

RUESSELSHEIM, Germany (Reuters) — General Motors Europe is forming a group to discuss the future of Opel‘s plant in Antwerp, Belgium, and will give details on its restructuring plan after talks are concluded, GM Europe President Carl-Peter Forster said.
“We will naturally examine once again all options for Antwerp and see if there is still a possibility (to keep it open),” Forster told reporters in Ruesselsheim on Monday.

Magna International Inc. and Russian partner Sberbank two weeks ago struck a deal to buy a majority stake of Opel from GM. They plan to cut about a tenth of Opel’s work force of 50,000, half of whom work in Germany, and could close the Antwerp plant that is losing production of the Astra hatchback.

Negotiations over Magna’s restructuring plan for Opel will continue on Friday, two sources familiar with the matter said.

Forster said the fact that all investors who bid for Opel, including Magna and Belgium investment company RHJ International, said that Antwerp could not be kept in the long term “gives us cause for concern.”

GM Europe said it would form a working group to deal specifically with the issue of Antwerp as part of restructuring talks that are expected to result in 10,500 job cuts at Opel — the bulk of which will likely affect the German plants in Bochum and Ruesselsheim.

Profitability issue

Forster, a top candidate to become CEO of a new Opel, rebutted a recent report in German magazine Der Spiegel that said Antwerp was more profitable than its rival site in Bochum.

If this was true it could pose a problem for Magna when it seeks regulatory approval from EU competition authorities, because it could be difficult to justify shutting down a more efficient plant while keeping a less efficient one alive.

“We came to a different calculation and naturally we will share this with the labor representatives,” Forster said.

Bochum’s work force leader Rainer Einenkel had said on Friday the cost to manufacture a vehicle at his site was 200 euros ($293) lower per car than in Antwerp.

An initial round of negotiations over Magna’s planned restructuring began on Monday between delegates from Opel’s work force and the management of GM and Magna.

“All parties have agreed that this (restructuring) plan will be discussed internally. Further information will first follow after the conclusion of the talks,” GM Europe said in a statement.

Forster hopes the talks can be wrapped up as quickly as possible since a written pledge by unions to contribute significantly more than 1 billion euros in labor costs is a prerequisite for GM and Magna to sign a deal.

GM CEO Fritz Henderson had said he hopes a signing can happen as early as the beginning of October.

GM CEO Henderson sees Opel signing by early October

FRANKFURT (Reuters) — General Motors Co. CEO Fritz Henderson expects that a deal to sell a majority in Opel to a Russian-backed consortium around Magna International Inc. can be signed by the beginning of next month.
“We’re trying to get all things done by early October,” he told reporters at the Frankfurt auto show on Wednesday.

Speaking about GM‘s domestic business, Henderson said GM expected to achieve its break-even point for the U.S. market next year and added that September retail sales would be “very weak” for GM and the overall industry now that the government’s “Cash for Clunkers” scheme had expired.

Henderson said there were four minor issues still to be resolved with Magna on the Opel deal, such as how to implement joint purchasing, but these were easy enough for him to be highly confident a sale could close by the end of this year.

“Please don’t misread me in saying we have disagreements — it’s just that the work was prioritized into four major items that are the highest complexity,” he said.

“Those are now completed and could be signed today. We just have some work to go on the smaller agreements before all eight can be done.”

Unforeseen delays possible

GM plans to conclude the sale by the end of November, but Henderson said he would not rule out the time plan could slip by as much as a month for unforeseen reasons.

Henderson rejected speculation that GM might still be examining alternatives to a Magna deal. GM‘s chief negotiator on the Opel sale, John Smith, had criticized that offer versus a rival bid from financial investor RHJ International.

“We want this deal to close. We want Opel to succeed — period,” the GM CEO said, adding there were no attempts by GM to wriggle a clause into the deal to buy Opel back in the future.

“There is no call option. There is no put option. So they can’t force us to buy and we can’t force them to sell. But if they want to sell, we have the right to make an offer,” he said.

While state-owned Russian lender Sberbank could not sell its 27.5 percent stake in Opel to just anyone, he was not concerned over a potential sale to Russian carmaker GAZ.

“We’re OK with that. We’ve been OK with that. So if they were to do it tomorrow there would be no problem,” he said.

GAZ, which almost formed a joint venture in Russia with GM and Magna over a year ago, has access to GM’s intellectual property under the deal and might end up building Opels in Nizhni Novgorod along with Opel‘s main plant in St. Petersburg.

“It would not likely be done by GAZ, but it could be done,” Henderson said, adding that he liked the idea of GM jointly producing with GAZ as previously planned with the joint venture.

Bochum vs. Antwerp

Henderson said Magna’s restructuring plans for Opel, which include 10,500 job cuts in Europe, were “sufficient,” and that Opel‘s losses would narrow a lot in 2010 versus this year.

“By 2011, we should be able to see the business get into a profitable position. That was what our plan was that was submitted to the (German) government,” he said. “It depends on volumes and many other things but if we execute that business plan together, the business should be able to achieve that.”

He said Opel‘s Belgian plant in Antwerp and its some 2,400 blue-collar workers could face closure under the Magna deal.

“That plant has been under evaluation for some time; no final decision has been taken. But it’s certainly at risk,” he said, adding that he was not looking to build any crossovers on GM‘s Gamma subcompact platform in Antwerp. Efficiency metrics like the cost per vehicle did not show that Antwerp was better than Bochum, a German site that would remain open under the deal, Henderson said. The EU could object to the Magna deal were this true.