* GM's unit to report Q4 loss deeper than Q3-sources
* No immediate Opel plant closures under turnaround plan
* GM has not asked union to reopen labor contract-sources
By Ben Klayman and Christiaan Hetzner
DETROIT/FRANKFURT, Feb 8 General Motors Co
will report a loss of more than $300 million at its
troubled Opel unit next week, as the U.S. automaker races to
find cost cuts that can win the backing of its German union,
people familiar with the situation said.
Wall Street wants a fast restructuring to slash costs, while
the German union, IG Metall, has refused to consider immediate
plant closures or job losses.
As GM executives move ahead with a 100-day plan developed by
Opel's CEO, they have pulled back from hard-line options such as
bankruptcy, said sources close to management and German labor,
who asked not to be identified because of the sensitivity of
IG Metall's Opel contract, which covers 20,000 hourly
workers, runs through 2014. GM has not asked to reopen that
deal, the sources said. Instead the focus has been on steps such
as streamlining warehouse operations and cutting engineering
"Plant closings and reopening the labor deal, there are no
decisions on any of that," said one of the sources familiar with
GM has not commented on its talks with IG Metall but has
repeatedly said management and labor representatives have been
working together to make the unit profitable. Opel Chief
Executive Karl-Friedrich Stracke said in a letter to employees
on Wednesday that no decisions have been made to close plants,
shift vehicle production or cut jobs.
Pressure is mounting on GM, with its European business
expected to report a fourth-quarter loss that is wider than the
"If within the next six months there's not demonstrable
change at Opel, then investors are going to be asking serious
questions about leadership," Morgan Stanley analyst Adam Jonas
Restoring Opel to profitability would address one of the
biggest uncertainties left untouched by the Obama
administration's $50 billion taxpayer-funded bailout in 2009.
In November, GM Chief Executive Officer Dan Akerson signaled
his growing impatience with Opel by naming Vice Chairman Steve
Girsky to head Opel's board. Girsky has been joined on that body
by Chief Financial Officer Dan Ammann, International Operations
head Tim Lee and global product chief Mary Barra.
In another sign that GM is working closely with its unions,
IG Metall will name United Auto Workers union President Bob King
to the Opel board next month, the sources said.
King is trying to win the support of IG Metall for the UAW's
efforts to organize the U.S. plants of German automakers and he
would probably not endorse any quick plant closures in Europe,
one of the sources said.
In fact, Opel union chief Wolfgang Schaefer-Klug was in
Detroit meeting with King on Monday, the sources said.
When GM reports fourth-quarter results on Feb. 16, GM
Europe's loss will be larger than the $292 million loss of the
prior quarter, the sources said. However, it will be lower than
the $568 million loss of the fourth quarter of 2010.
GM, which lost $580 million in Europe through the first nine
months of 2011, is not alone as it struggles there. U.S. rival
Ford Motor Co's losses in Europe nearly quadrupled in its
most recent quarter.
"Purely from a manufacturing point of view, Opel is not in
bad shape versus its European competitors right now, and I don't
see any need at all for the company resorting in a panic to
measures like taking out an entire plant," LMC Automotive
analyst Arthur Maher said.
Instead, the 100-day plan developed for GM by Opel's Stracke
could include asking the union to postpone wage increases, the
GM may still seek to close assembly plants in Bochum,
Germany, and Ellesmere Port, England, but that is not part of
the current plan, sources said. A regional bankruptcy for Opel,
an option some analysts had raised, also is not under
Meanwhile, GM executives are looking everywhere to cut costs
and have been working with advisers Alix Partners. One plan,
dubbed "Project Accelerate," is meant to save money on a
specific vehicle line, the sources said.
"Labor is a small piece of this restructuring," the source
familiar with GM's strategy said.
But GM is also pressing the union to deliver on a commitment
for 177 million euros ($234.6 million) in annual cost savings,
the sources said.
The union is willing to work with GM to make Opel
profitable, but any concessions would have to be accompanied by
GM agreeing to shift work to Opel plants or exporting more Opel
vehicles outside Europe, the sources said.
However, Morgan Stanley's Jonas called the need to reopen
the Opel labor deal obvious, adding that shifting production of
some vehicles from South Korea to Europe would not be enough.
"Making Daewoo-based Chevrolets in Germany, one of the
highest-cost countries in the world, is not going to cut it," he
Union leaders at Ellesmere Port said GM has not talked with
them about a shutdown. "No one's come to close," said John
Cooper, one of the plant's top union representatives.
In the meantime, the GM executives who joined Opel's board,
including Girsky, have traveled to Europe regularly with the
idea of moving relationships in Germany away from the "us versus
them" mentality of the past, the sources said.
"This is about building bridges," the source familiar with
GM strategy said. "Opel is not this island by itself."