GM needs 'two to three months' for plan to fix Europe, Stracke says
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Stracke: GM-PSA alliance is not about cutting capacity. |
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GENEVA -- General Motors Co. will announce a restructuring plan for its Opel/Vauxhall unit in two to three months, GM Europe President Karl-Friedrich Stracke said.
Stracke said GM sees "high urgency" to fix its operations in Europe, which lost $747 million last year before interest and taxes.
"Two to three months I think we need, for sure, before we can speak more precisely on further details," Stracke said at the Geneva auto show on Tuesday. "We need to engage every stakeholder in the next two to three months to prepare for any decisions."
GM's plan until November was to break even in Europe.
Stracke, who is also CEO of Opel/Vauxhall, said GM's alliance with PSA/Peugeot-Citroen will not preclude GM from shrinking its operations in Europe.
"This alliance is not set up to fix anybody's capacity issue," he said. "That needs to be done by everybody engaged here. PSA will address theirs and we need to address ours."
GM will pay about 320 million euros ($420 million) to acquire 7 percent of PSA, Europe's second-largest carmaker.
The two companies are forming an alliance for purchasing and vehicle development to reduce costs by about $2 billion annually within five years.
Cost cuts
GM has opportunities to reduce its fixed costs before labor contracts in Europe that expire in 2014, Stephen Girsky, chairman of its Opel supervisory board, said in an interview in Geneva.
Those cuts don't have to be from closing plants or breaking contracts, he said.
PSA's and GM's combined purchasing budgets are about $125 billion for materials such as steel, glass, rubber and finished parts, according to a Feb. 29 slideshow presentation.
Savings on materials costs "will take time to develop" as the automakers introduce new products, said Girsky, who is also a GM vice chairman.
GM and PSA's agreement focuses initially on small and midsize cars, multipurpose vehicles and crossovers. The plan calls for at least four products to be manufactured within four years or planned for production within the following 18 months.
"Near-term restructuring by GM in Europe is going to be largely incremental," Peter Nesvold, a New York-based analyst at Jefferies & Co., said last week. "Most obvious fat has already been trimmed."
Source: Bloomberg
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