Is the End Nigh for Opel? | Business| Economy and finance news from a German perspective | DW | 25.10.2004
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Is the End Nigh for Opel?

As restructuring talks continue, Opel's works council and US parent company General Motors are considering a possible merger of GM's European subsidiaries.

Ailing German car maker Opel might cut a third of its workforce

Ailing German car maker Opel might cut a third of its workforce

Since 5:45 am local time Monday, it's once again business as usual at the Opel plant in Rüsselsheim. But on the executive floor, plans are afoot to radically restructure the company.

The head of the general works council at Opel, Klaus Franz, told the weekly Welt am Sonntag that the council was in direct talks with management in Detroit and Zürich focused on developing an entirely new company structure. The ultimate objective is to establish a "European Corporation," or "Société Européene," based in Brussels, out of GM's 100 European subsidiaries.

Cheaper, simpler?

Franz stressed that he hoped this would be beneficial to both management and employees.

"The company's new legal form would make GM's complicated existing structures obsolete," he told the newspaper. "And the company would save money."

He also pointed out that restructuring the company as a corporation would simplify business by making individual negotiations with the boards of GM's subsidiaries, such as Opel and Saab, unnecessary. "We could talk to our European management directly about decisions and problems," he pointed out.

Moving from Zürich to Brussels

According to Welt am Sonntag, the proposal is fast taking shape. The head of GM Europe, Fritz Henderson, would take the reins of the new corporation, with GM Europe's president Carl-Peter Forster acting as deputy.

The headquarters of a European corporation legally require a location in a EU member state. For now, Brussels is being tipped as the most likely site, replacing the current headquarters of GM's 100 European subsidiaries in Zürich.

Opel would remain a brand

Opel Logo im Regen

The Opel logo

If the plan goes ahead, Opel would be subsumed into General Motors Europe and its existing legal form would be dissolved.

"The Opel logo will remain on the cars and factories," observed one high-ranking GM manager, who stressed this was crucial to retaining Opel as a German brand.

Employee status

It still remains to be seen what status employees would have in the new corporation.

Their participation in the board of control is based on the ratio of employee numbers in the individual companies joining together in the European holding. Over half of GM's 63,000 employees in Europe are contracted to Opel, which means the Opel works council can expect considerable influence within the new corporation.

The restructuring talks come weeks after GM unveiled plans to slash 12,000 jobs in Europe -- including 10, 000 in Germany alone -- as part of a €500 million ($625 million ) cost-cutting drive.

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