April 19, 2018 / 9:53 AM / a year ago

Opel CEO says German costs twice those of other plants -source

HAMBURG, April 19 (Reuters) - Some of Opel’s German plants cost twice as much to run as new French owner PSA Group’s other factories, Opel’s chief executive told employees as the company tries to hammer out an effiency deal with labour leaders in return for investments.

Michael Lohscheller was speaking at a town hall meeting on Wednesday as the issue took on a national dimension with Chancellor Angela Merkel intervening to say she expected PSA to honour its commitments during the 2017 takeover.

At stake is the future of Opel’s Eisenach plant, which employs 1,800 workers. Shop stewards earlier this week rejected wage concessions demanded by PSA in exchange for a commitment to invest in a production line for a new model there.

Lohscheller told a town hall meeting at Opel’s headquarters in Ruesselsheim, western Germany, that profitability was improving but added: “In part, our factories were twice as expensive as PSA factories.”

His comments were first reported by German weekly Wirtschafts Woche and were confirmed on Thursday by a source familiar with what he said.

European carmaker Opel, which PSA bought from General Motors for $2.6 billion, has made losses for almost 20 years, and CEO Carlos Tavares has been frustrated in his bid to cut high production costs.

Opel’s German sites have so far been excluded from PSA’s sweeping investment plans, and management has demanded that workers in Germany forego a Christmas bonus and other benefits to help increase efficiency.

Powerful German labour union IG Metall union has said however that PSA’s cost targets per vehicle cannot not be met without management’s making concessions on pay, and have demanded that Opel’s management fulfil its pledge of allocating more production to the Eisenach plant.

Spiegel magazine, citing IG Metall sources, reported that Opel would need to cut the workforce at Eisenach to 1,000 from 1,800 if existing production plans were implemented and no new models were added to the production line. (Reporting by Jan Schwartz Writing by Edward Taylor Editing by Georgina Prodhan)

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