Magna International, the auto-parts supplier heading a group to buy General Motors’ Opel unit, may have a hard time cutting labor costs to meet a target to return the European carmaker to profit within two years. Magna has pledged to keep all of Opel’s plants in Germany open even as it seeks to wring $1 billion in concessions from unions, according to Bloomberg. To save more of Opel’s 25,000 German jobs, Magna plans to move some production to Eisenach from a factory in Spain, even though wages are lower than in Germany. “New Opel is a company with factories with high costs,” said Manfred Wennemer, former chief executive officer at Continental and the only board member of the German government-backed trust to vote against the deal, which passed by a 2-to-1 vote with one abstaining. “The real, necessary restructuring isn’t happening.” GM, having emerged from bankruptcy in July, said yesterday it chose Magna as buyer for Opel after weeks of deliberating options for the unit’s future including a sale to Magna, to rival bidder RHJ International or keeping it as a wholly owned division. By picking Ontario-based Magna, GM will be able to tap another 3 billion euros ($4.4 billion) in loan guarantees from Germany. Magna is likely to close Opel’s plant in Antwerp, Belgium. John Smith, Detroit-based GM’s chief negotiator for Opel, said yesterday.
Magna Faces Challenges With Opel Turnaround Plans
Magna has pledged to keep all of Opel’s plants in Germany open even as it seeks to wring $1 billion in concessions from unions.
September 11, 2009