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Why German Opel Workers Can't Stand GM

Friday, 6 Nov 2009 | 6:59 AM ET

General Motors is already feeling the backlash of its decision not to sell European automaker Opel to Magna International as expected, as workers in Germany went on strike.

GM has yet to even present its restructuring plan, but the company faces not just ire over American-European cultural differences, but worker unease at job security, European-style.

Protestors carried banners reading "GM - Go Away!" and "Hands off Opel!" while on stage speakers accused GM of bad management and of betrayal. Workers in the German town of Russelsheim wore notices saying "freedom for the slaves of GM."

This is a "long-entrenched story of misunderstandings," Christoph Stürmer, director of product development at IHS Global Insight, told CNBC.com.

"For years, Opel workers had the impression the American management didn't understand what it meant to make products for the European market," Stürmer said.

Opel employees felt there was no European identity and no sense of unity amid the carmakers' plants in various countries on the continent, he said. And the big hope was that a deal with Canadian parts maker Magna would bring just that.

"The big hope that especially German, Belgian and Spanish employees had was that, when cut off from GM, they would become a unified European manufacturer," Stürmer explained.

Workers of the Opel plant, a subsidiary of General Motors, in Bochum, western Germany, block the entrance gate on Monday Oct. 18, 2004. Workers protest against plans of the carmaker's parent company General Motors to cut some 10,000 jobs in Germany. (AP Photo/Frank Augstein)
Frank Augstein
Workers of the Opel plant, a subsidiary of General Motors, in Bochum, western Germany, block the entrance gate on Monday Oct. 18, 2004. Workers protest against plans of the carmaker's parent company General Motors to cut some 10,000 jobs in Germany. (AP Photo/Frank Augstein)

Throughout the seven months of negotiations for the sale of Opel, which employs over 25,000 people in Germany, politicians in that country were backing the Magna deal, which was believed to save all four plants in the country.

Self-Interest Prevails

By contrast, British politicians feared jobs would be cut in at least one of the two automaker's sister plants in the UK, where it operates under the name of Vauxhall.

Now, all those expectations may have been reversed, and that's partly what caused the German revolt, Simon Dorris, Partner with Lansdowne Consulting, told CNBC.com.

"The basic response is just self-interest, not a cultural issue," Dorris said.

German politicians supported a deal with Magna and were ready to offer the Canadian company state aid to help it keep jobs.

But European Union Competition Commissioner Neelie Kroes insisted that favoring a company over the other in state aid was illegal and asked the German government to clarify its position.

When the German government stated publicly two weeks ago that the 4.5 billion euros it was offering was available for any bidder for Opel, GM realized it didn't necessarily need to sell the carmaker as it, too, could get the money – something it should have known from the start, Dorris said.

"I think the GM board has ended up with egg on its face. They haven't handled this well," he added.

Turn European

GM could have spared itself the embarrassment, plus the workers and politicians revolt, if it took that option earlier in the process, but "the management attention required to restructure their European operation was unavailable," Dorris said.

But now GM has to make amends and that involves a big organizational and cultural change.

Winterizing Your Portfolio - A CNBC Special Report
Winterizing Your Portfolio - A CNBC Special Report

"The only way for GM to start mending this is to create that European company," Stürmer said, adding that currently, GM's 60 European companies "are headless chicken."

For instance, in Germany, Opel is part development center, part-sales and part-factory while in Spain it has a big factory and a very small sales operation; an integrated company would eliminate these discrepancies, he said.

Stürmer gave the example of Japanese carmakers in the US, where factories are run by US management according to US methods, but the profits go to Japan. In the same way, the management of the European operations should be European, he added.

"Continuity is very important. I think it is really about offering European GM employees their own culture, their own identity. This is what Magna promised," Stürmer said. "It was the promise of freedom that attracted them."

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