Here's a piece from Huffington Post by Peter Martindale:
General Motors on Classic Road to Disaster by Sentimentally Holding Onto A Loss-Making Division
Since 1999 General Motors has lost $15.6 milliard; that is a rough-average of $1,000 million a year. Three years ago the company looked at off-loading its European operation but due to political interference from politicians in Europe it was not able to conclude a deal. A year later, it sold its Saab subsidiary to Spyker, which has struggled with the burden, and was driven to bankruptcy in December just last year. Spyker was unable to raise necessary funding in these times of austerity in the Western World. It had therefore looked to China but there is a widespread recognition of a problem with the Chinese record of not respecting intellectual property. General Motors has a considerable amount of intellectual property on licence to Saab which Saab is totally reliant upon for success. Not surprisingly then, General Motors would not authorise involvements that would put their intellectual property at risk of dissemination.
If a willing buyer can be found for the General Motor's remaining European business in these increasingly harsh economic times, then General Motors would be doing well to sell. Obviously they cannot sell to an entity that would put the intellectual property at risk, and that rules out the most significant sources of liquidity currently available. The chance of finding a willing buyer, though, when there is such political interference from German vested interests, makes such prospects very slim. A new owner who views the Vauxhall-Opel business in its own right, rather than as an adjunct to another brand, could make a go of it: this would give the best hope to the company, let's hope a buyer is forthcoming.
The danger with GM restructuring its European operations is that, although the Ellesmere Port manufacturing plant in Britain was generally considered to be safe in any re-structuring, it is not anymore, and Luton certainly is not, and could easily be one of the plants to be closed if the company does not sell. Another, or two, plants in Europe would also be at risk immediately, and others in the future. General Motor's European operations in the last sixth of a century has had a disastrous cost on the company. General Motors has an eighty-five year record in Britain and Europe, and for much of that history was very successful, but that is the problem, sentimentality is over-ruling good business sense. So desperate is General Motors to retain market-share that it is clinging onto mere statistics that boost its grandiose appearance, rather than being smaller and more profitable. Although there are some circumstances where it is worth having loss-leaders, it is not sensible in an entire market place, on the scale in which General Motors is doing it, or for so many years. Whatever plants close now as a result of restructuring would be unlikely to arrest the losses and prevent the eventual inevitable further closures.
That General Motors is making a loss now is all the more worrying, in what could be considered the peace before the onslaught on competitiveness in the car manufacturing industry, as the Chinese are about to flood the European market with their cars, making General Motor's losses even greater.
If plants are closed as part of the restructuring plan currently under consideration, then there must be a political backlash. Any closure would mean permanent loss to the industry, and a further degradation of manufacturing in this country. The loss of a manufacturing plant to the British car making industry overall, would be disastrous as it would further erode the critical mass which makes the component supply industry viable, which in turn makes the British car manufacturing industry itself viable. This would, ironically, be at a time that the Government is promoting an initiative to strengthen the supplier industry, in order to keep both it and vehicle manufacturing viable. General Motors say they have kept the Government and the unions appraised of the restructuring plans, it will be shame upon such politicians if that includes downgrading any of General Motor's operations in the UK.
The problem is going to be the vested interests of German unions, politicians and industry, and the fact that the European Union is weak on fairness: all of Britain's industries have seen that there is not a level playing field in Europe; General Motor's ongoing losses now are clarion to that..
If General Motors does not sell to a suitable buyer then the chances are that in just a few years, Vauxhall Motors, one of the few remaining British car marques, will follow a long list of illustrious names, and will be no more.
Opel makes huge loss in 2011
The numbers are in and show that Opel made a huge loss in 2011.
Retuers report that for the year, Opel reported a loss of $700 million. GM originally aimed for its Opel unit to break even but abandoned that target in November as demand there deteriorated.
"We clearly have work to do in Europe," GM Chief Financial Officer Dan Ammann told reporters. Continuing saying that GM has not gone far enough in cutting costs at Opel, but he declined to provide a 2012 financial forecast.
As reported earlier, this was Opel's twelth consecutive year of loss.
Unfortunately for GM and Opel, cost cutting in Europe will take time. To cut costs negotations with the unons must be held and that will take a matter of months and not weeks reports Reuters.
"I expect this not to happen in a month or so, rather than in a couple of months, that's at least how I see the timetable," Opel Chief Executive Karl-Friedrich Stracke told reporters on Thursday during a conference call.
Stracke said he aimed to raise the utilization of Opel's vehicle production capacity to a 100 percent on a three shift basis. At the time being only two thirds of the capacity is being utlized.
He declined to comment on whether he intended to achieve the increase either by taking capacity out or shifting overseas production of cars sold in Europe under the Chevrolets or Opel to some of his underutilized factories.
"Our plants have been anticipated to be utilized three shifts in the future and utilized at 100 percent," he said.
The Opel workers are clearly aiming at the latter. But first of all they want to stop the import of Asian built Opel cars.
"In order to fully use the capacity of the European plants, the planned import of Opel/Vauxhall vehicles from other global regions to Europe needs to be reconsidered," said the Chairman of the German Group Works Council Wolfgang Schaefer-Klug according to Reuters.
In other words, the negotaitons between the Opel management and the unions will be tough. And as usual the cost cuts will probably not be tough enough and Opel will continue to strive to achieve profits.
The question is this: For how long will the American taxpayers be happy paying the salaries of the German Opel workers?
Retuers report that for the year, Opel reported a loss of $700 million. GM originally aimed for its Opel unit to break even but abandoned that target in November as demand there deteriorated.
"We clearly have work to do in Europe," GM Chief Financial Officer Dan Ammann told reporters. Continuing saying that GM has not gone far enough in cutting costs at Opel, but he declined to provide a 2012 financial forecast.
As reported earlier, this was Opel's twelth consecutive year of loss.
Unfortunately for GM and Opel, cost cutting in Europe will take time. To cut costs negotations with the unons must be held and that will take a matter of months and not weeks reports Reuters.
"I expect this not to happen in a month or so, rather than in a couple of months, that's at least how I see the timetable," Opel Chief Executive Karl-Friedrich Stracke told reporters on Thursday during a conference call.
Stracke said he aimed to raise the utilization of Opel's vehicle production capacity to a 100 percent on a three shift basis. At the time being only two thirds of the capacity is being utlized.
He declined to comment on whether he intended to achieve the increase either by taking capacity out or shifting overseas production of cars sold in Europe under the Chevrolets or Opel to some of his underutilized factories.
"Our plants have been anticipated to be utilized three shifts in the future and utilized at 100 percent," he said.
The Opel workers are clearly aiming at the latter. But first of all they want to stop the import of Asian built Opel cars.
"In order to fully use the capacity of the European plants, the planned import of Opel/Vauxhall vehicles from other global regions to Europe needs to be reconsidered," said the Chairman of the German Group Works Council Wolfgang Schaefer-Klug according to Reuters.
In other words, the negotaitons between the Opel management and the unions will be tough. And as usual the cost cuts will probably not be tough enough and Opel will continue to strive to achieve profits.
The question is this: For how long will the American taxpayers be happy paying the salaries of the German Opel workers?
Opel is a mess
On Thursday General Motors will publish its fourth quarter results and reveal just how much its German subsidiary Adam Opel has lost in 2011. The loss is expected to be EUR 1 billion.
"It's a mess," said Michelle Krebs, a senior analyst at Edmunds.com. "GM's back is against the wall on Opel. It just is going to have to do something there. So I think we will see something coming in that regard."
The Opel unit has suffered from nearly $14 billion in losses since 1999 and GM has lost its patience. And the US Government surely is upset that GM did not sell Opel as intended back in 2009.
"They're very concerned about it," Krebs said. "The whole European situation. The (euro zone) debt crisis is lowering car sales from last year to this year. Opel has always been a problem for GM. And there's a huge problem in Europe overall with the total industry. There's too much factory capacity for the demand. It's a very mature market. The market's not going to grow, and yet they've got all this capacity."
What makes matters worse for Opel is that GM is doing well and making money in all other markets around the world.
"GM had a good year in the U.S.," Krebs said. "Lower incentives, improved sales volume, increased market share, those are all a winning formula."
"It's a mess," said Michelle Krebs, a senior analyst at Edmunds.com. "GM's back is against the wall on Opel. It just is going to have to do something there. So I think we will see something coming in that regard."
The Opel unit has suffered from nearly $14 billion in losses since 1999 and GM has lost its patience. And the US Government surely is upset that GM did not sell Opel as intended back in 2009.
"They're very concerned about it," Krebs said. "The whole European situation. The (euro zone) debt crisis is lowering car sales from last year to this year. Opel has always been a problem for GM. And there's a huge problem in Europe overall with the total industry. There's too much factory capacity for the demand. It's a very mature market. The market's not going to grow, and yet they've got all this capacity."
What makes matters worse for Opel is that GM is doing well and making money in all other markets around the world.
"GM had a good year in the U.S.," Krebs said. "Lower incentives, improved sales volume, increased market share, those are all a winning formula."
Opel on a twelve year streak of losing money
According to German newspaper Handelsblatt, General Motors German unit Adam Opel can look back at twelve years of deficit. And now Opel is desperate to cut cost. First out the plant in Bochum.
GM second in command, Stephen Girsky,says that GM is desperate to turn the European operation around "The corporate headquarters is under great pressure to return to profits in Europe."
But Opel has not made profits for the last twelve years. Since 1999, the subsidiary has contributed to the GM's losses with $11 billion. Mainly because the market share of Opel has more than halved since 1999 and the manufacturing plants are not fully utilized. According to internal calculations, the utilization is currently only at three quarters and could fall further.
And now the plant in Bochum is under treath of being shut down.
"40,000 jobs in our county is attached to the plant," said Helmut Diegel, Executive Director of Industry and Commerce in Middle Ruhr.
To remedy the fincial situation and low sales, Opel is desperate to enter new untapped markets like China, but it is doubtful that GM will give Opel the green light. Reason being that GM is already making tons of money by selling Buick and Chervrolet in China.
Another example of GM's focus on the American brands as opposed to Opel, is the recent appointment of Alan Visser in charge of Chevrolet's global marketing. GM said that Visser will focus especially on markets outside North and South America. This means that Opel will need to find a new head of sales, marketing and aftersales.
German auto expert Dudenhöffer said the following about Opel's situation: "The Americans have lost money in Europe for more than a decade. "The bottom line is that the outlook for Opel is scary for the employees. You can not rule anything out."
GM second in command, Stephen Girsky,says that GM is desperate to turn the European operation around "The corporate headquarters is under great pressure to return to profits in Europe."
But Opel has not made profits for the last twelve years. Since 1999, the subsidiary has contributed to the GM's losses with $11 billion. Mainly because the market share of Opel has more than halved since 1999 and the manufacturing plants are not fully utilized. According to internal calculations, the utilization is currently only at three quarters and could fall further.
And now the plant in Bochum is under treath of being shut down.
"40,000 jobs in our county is attached to the plant," said Helmut Diegel, Executive Director of Industry and Commerce in Middle Ruhr.
To remedy the fincial situation and low sales, Opel is desperate to enter new untapped markets like China, but it is doubtful that GM will give Opel the green light. Reason being that GM is already making tons of money by selling Buick and Chervrolet in China.
Another example of GM's focus on the American brands as opposed to Opel, is the recent appointment of Alan Visser in charge of Chevrolet's global marketing. GM said that Visser will focus especially on markets outside North and South America. This means that Opel will need to find a new head of sales, marketing and aftersales.
German auto expert Dudenhöffer said the following about Opel's situation: "The Americans have lost money in Europe for more than a decade. "The bottom line is that the outlook for Opel is scary for the employees. You can not rule anything out."
GM Shares Hit All-Time Low as Opel continues to struggle
Here's a few quotations from an interesting article at National legal and policy center:
General Motors' stock hit an all-time low today of $31 and change.
The media, as well, hyped the IPO and practically proclaimed the Chevy Volt as being a savior for GM. Neither the stock performance nor the Volt is living up to expectations. The risks now are greater than ever.
GM's European division, Opel, continues to struggle and weigh on profitability. It may take a while, if at all, for Opel to become profitable.
Chevy Volt undercuts Opel Ampera on price
I have reported earlier that GM is losing it's patient with Opel and I asked the question how long GM will keep Opel and maybe one option is to replace Opel with Chevrolet. Today it became known that GM will sell the Chevrolet Volt 1000 euro cheaper in Europe than the price set on the Opel Ampera. If GM really wants Opel to succeed, then the general wouldn't undercut the price on the Ampera, or what?
Here's what the Independent writes:
Same old shit, different wrapping and different price tags.
Here's what the Independent writes:
The Chevrolet Volt will go on sale in Europe at a price cheaper than that of its rebadged cousin the Opel Ampera, General Motors has announced.
AllCarsElectric's Antony Ingram said that the most obvious difference is in the styling, with the Volt clearly a Chevrolet but the Ampera looking like no other current Opel and featuring a far more distinctive front.
Apart from some further interior cosmetic alterations, the rest of the car is essentially the same, leading Motorward to comment that it's getting hard to understand Chevrolet's pricing policy for the Volt.
Same old shit, different wrapping and different price tags.
The Wall Street Journal: Opel is one of the worst players in Europe
In a recent news analysis, The Wall Street Journal calls Opel one of the worst player in Europe:
And the article continues:
The state of Opel according to Morgan Stanley analyst Adam Jonas:
And as previously reported Europe is GM's only money-losing region:
And Opel will remain a money burner:
"This is one of the worst players in Europe, which is already the worst car market in the world."
And the article continues:
GM Europe President Nick Reilly faces high costs in trying to revive Opel.
The state of Opel according to Morgan Stanley analyst Adam Jonas:
"Opel is worse than you think it is''
And as previously reported Europe is GM's only money-losing region:
GM Europe incurred a loss of $1.8 billion in 2010, GM's only region to be unprofitable as the auto maker last week reported its largest annual profit in more than a decade.
And Opel will remain a money burner:
Mr. Jonas estimates Opel will remain a drain on its parent even when profitable because of a large cash requirement and high operating costs. Even if Opel were to report a slim profit, it would probably continue to burn cash, he said.
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