General Motors has been vying to close a beleaguered auto factory of its German subsidiary Opel for some time. The carmaker's president has now revealed just how much the contentious move will cost.
As if General Motors weren't already smarting from a series of costly recalls, the American auto maker said Wednesday that the closure of an aging factory in Bochum, Germany, wouldl set it back a whopping $866 million (635 million euros).
The decision to close the plant is part of a drive to cut costs in GM's European operations amid broader restructuring, but Wednesday's announcement illustrated the complexity of closing a factory in a country with such strong trade unions as Germany.
GM's European subsidiary Opel had been in talks with the powerful IG Metall trade union for months and last week the company said it had finally reached a severance deal with employees of the Bochum factory, which includes both vehicle and transmission facilities.
GM's president, Dan Ammann, said the company had already absorbed $381 million of the cost into its balance sheet from last year and the first quarter of 2014.
The remaining $485 million would be booked during the course of this year, he said.
Opel has been operating at a loss for some time and GM hopes that shuttering the plant will help convince investors it is being proactive about bringing its European operations back into the black by next year.
cjc/uhe (Reuters, dpa)