Opel restructuring takes shape, aims to cut overcapacity | Business| Economy and finance news from a German perspective | DW | 14.05.2012
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Opel restructuring takes shape, aims to cut overcapacity

German carmaker Opel has unveiled first details of a substantial overhaul to return it to profitability. The GM subsidiary will start a production merry-go-round that could see a factory fall by the wayside.

Opel's management has renewed its commitment to keep its main German car plant at Rüsselsheim open until at least 2014, as agreed in a deal with trade unions in exchange for wage concessions.

However, production of the struggling carmaker's bread-and-butter Astra model was likely to be completely shifted to plants in Ellesmere Port, UK, and Gliwice, Poland, Opel's Chairman of the Board, Karl-Friedrich Stracke, told a staff meeting Monday.

"In view of projected demand for our cars, concentrating Astra production in just two factories makes more economic sense," Stracke said.

The Opel Astra model is currently being produced in three different plants, which run just two shifts to meet demand. The plan now was for three shifts to be introduced at two factories, Stracke added.

The European subsidiary of US auto giant General Motors (GM) is said to have production overcapacity of about a million vehicles per year, which in 2011 resulted in a loss of $747 million (580 million euros).

Rüsselsheim vs Bochum

In recent months, there have been media reports suggesting that GM was planning to close "one or two" of its seven factories in Europe in efforts to achieve a turnaround.

In addition, speculation is mounting that Opel might shift some of its production from the 50-year-old Bochum factory in Germany to Rüsselsheim to compensate the more modern plant for the loss of the Astra production. It is feared that the move could spell the end of car production in Bochum.

Stracke didn't mention plant closures in his speech to workers, but instead announced an investment drive worth 11 billion euros to return to profitability.

Noting that three new "motor versions" would be introduced within the next 18 months, Stracke said Opel would launch a "model offensive" aimed at "substantially improving" profit margins, market shares and revenues by 2016.

In order to achieve this, Opel would become more active in overseas markets like China, Russia and Turkey, Stracke added.

The Opel chief also dismissed fears that the company's development division at Rüsselsheim might be scaled back in the wake of a recently agreed alliance between GM and French automaker PSA Peugeot Citroen.

"Should there be a project moved to PSA, Rüsselsheim will get a French project in return," Stracke said, adding that parent GM was even exploring the possibility of moving its Chevrolet production from the US to Europe.

uhe/mll (dapd, dpa)