Uncertainty as Opel restructures

In August 2001, the German-based car manufacturer, Opel (part of the General Motors group), announced a worldwide restructuring plan, arousing fears in Belgium about the possible closure of its plant at Antwerp. However, this threat receded following an agreement reached by the company and European Works Council on no plant closures and no compulsory redundancies in the restructuring process. The German management of Opel has indeed placed an emphasis on social dialogue and consultation, so as to identify measures that are both economically and socially viable.

A restructuring exercise at Opel, the German-based car manufacturer, which is part of the US-based General Motors group, was the front-page story in Belgian social and economic circles in late August 2001. The focus was on a threat of closure that hung over Opel's Belgian production site in Antwerp for six days. With 6,600 directly employed staff, Opel is the city's largest employer but furthermore, like most car manufacturing companies, it relies on a local, well-developed outsourcing network. The social and economic consequence of the closure of this site would therefore be considerable. It would undoubtedly have led to the largest single mass redundancy in the past few years. The impact would have been especially great because, in Belgium, the trauma of the sudden closure of Renault's Vilvoorde plant in 1997 lives long in the collective memory (EU9703108F).

Announcement of the restructuring plan

On Wednesday 15 August, the chair and managing director of Adam Opel AG, Carl-Peter Forster, informed the group's 43,000 employees of the existence of a restructuring plan called 'Olympia'. It aims to make the Opel marque profitable again by 2003 through savings of approximately EUR 2 billion (in 2000, the company posted a loss of EUR 427 million, compared with a profit of EUR 195 million the previous year). The measures that Mr Forster announced included the departure of 'several thousand people'. Two ways of cutting back the workforce were under consideration: closure of one of the 23 factories that Opel owns round the world; and a reduction in activities at several sites.

In the view of the German press, Antwerp was among the sites most threatened, along with Zaragoza (Spain) and Bochum (Germany). Two reasons were put forward to demonstrate Antwerp's vulnerability: first, the site assembled the Opel Astra, an ageing model with declining sales; and second, the German group wanted to reduce annual production by about 300,000-350,000 units, more or less the production level of the Antwerp site.

In Antwerp, the threat of a closure was taken very seriously, particularly when the Opel chair and managing director refused to rule out this possibility at a press conference. The management of the Antwerp plant tried to be reassuring, stating that 'it is impossible to imagine the path taken by group decision-makers' (quoted in the La Libre Belgique newspaper on 16 August 2001). In other words, management did not think the Antwerp site was any more threatened than any other, and it also highlighted the plant's qualities. For example, a recent study by the World Market Research Center classed Antwerp as the fifth most productive assembly factory in Europe, and the second best in the General Motors group in Europe. It was also in Antwerp, stated management, that 'all the main principles of manufacture, assembly and management that will be applied from now on in all Opel factories' had been tested.

Social concertation strategy

Compared with other announcements of restructuring exercises in the last few months, the industrial relations strategy chosen by Opel managers was diametrically opposed to the apparently predominant managerial practice of the 'fait accompli'. From the outset, the Opel chair was effectively obliged to make clear that the Olympia plan would be prepared in concertation (ie dialogue and consultation) with the trade unions and that, to leave time for negotiations, no final decision would be taken until 21 September at the latest. The aim was to find 'a solution that is economically reasonable, but also socially tenable', that is to say 'a solution which, in social terms, does not stir up trouble with the trade unions, and does not break with industrial relations' (quoted in the Le Soir newspaper on 21 August 2001).

The trade unions at Antwerp thought it scandalous that they should have heard of the threatened closure through the press. The announcement had also been made just as the factory was slowing down due to annual holidays. However, playing the 'social dialogue' card, they made repeated calls for calm, and sought to define a common position with other trade union organisations in Europe affected by the Opel restructuring.

At the same time, outside the factory, local and regional government were mobilising to defend the Antwerp site. At the end of an information meeting with Opel Belgium management, the mayor of Antwerp stated that the company would not 'drop workers'. The Flemish Minister of the Economy acknowledged that the general trend was towards reducing production capacity in Europe, but said he wanted to develop a 'proactive, constructive approach'. In this context, he also talked about a request for investment aid of EUR 10.9 million that had previously been filed by Opel Belgium management.

European Works Council agreement

Three important decisions were agreed at an extraordinary meeting of the General Motors European Works Council (EWC) at Rüsselsheim (Germany) on 20 August:

  • the EWC and management agreed that the Olympia plan would be implemented without any production sites being closed (Antwerp was therefore saved);
  • the Opel restructuring would take place without any compulsory redundancies; and
  • the measures forming part of the Olympia plan would continue to be negotiated with the trade unions.

These decisions taken in the EWC were, of course, warmly received in Antwerp. On the trade union side, although it was claimed that the decisions represented a 'European trade union movement victory that owed much to the solidarity that grew up after the Renault Vilvoorde closure', caution and mobilisation remain the order of the day. On the one hand, there continue to be many uncertainties; on the other, although the agreement reached in the EWC provides for no compulsory redundancies, it still confirms that posts will be abolished until production capacity is reduced. More globally, this agreement arguably fully complied with the objectives and timetable of the Olympia plan, and could therefore be seen as a victory for Opel management.

Commentary

The Opel restructuring plan is interesting for several reasons.

First, in terms of industrial relations, it gives credibility not only to the existence, but also the importance, of a 'European social model' based on concertation and bargaining. This is all the more remarkable given that the German-based Opel is a subsidiary of the American giant General Motors. Many observers accordingly felt that the agreement should also be seen as a clear sign from GM that it wanted to give Opel more managerial autonomy.

Second, although the use of the 'soft method' for restructuring avoided a catastrophic scenario, we should not ignore the possibility of certain negative consequences; for example, productivity gains linked to implementation of the Olympia plan could result in much more difficult working conditions for staff remaining. This is a fundamental issue for the trade unions.

Last, although 'downsizing' is one of management's first responses in difficult times, the Opel example is an opportune reminder that the employment factor is not the only factor involved in economic success. This depends also, if not more so, on the capacity to innovate, to communicate and, of course, to sell. Opel has some large deficits at certain levels, and that is undoubtedly where the German marque's challenges mainly lie. What is more, it is the only way it has for escaping from the spiral of endless restructuring plans. (Jean Vandewattyne, IST)

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