MUNICH -- General Motors Co.'s German unit, Opel, kept a promise to its union by applying to change its legal form back to a stock corporation from its current limited liability designation, the company said in a statement Tuesday.
The move lets employees share in the company's future profits and gives Opel's management board more responsibility over key decisions on its products.
"The management board is happy to recognize the accountability it has," Opel CEO Nick Reilly said in the statement.
The change satisfies a demand made by the union, which agreed to 265 million euros ($353 million) in annual wage savings in part because GM promised to change Opel to an Aktiengesellschaft, or AG in German, from a Gesellschaft mit beschraenkter Haftung, or GmbH in German. Opel workers had such a strong say because nearly 177 million euros of the yearly wage savings will come from Germany.
The change in Opel's corporate statutes means that staff will share in company profits, which are expected in 2012, the company said. The division, which includes the Vauxhall brand in the UK, will lose $1.9 billion in 2010, compared with a forecast loss of $3 billion at the beginning of the year, Reilly said earlier this month. He said the business has a chance of making money in 2011, excluding reorganization costs, and expects to return to profit a year later.
Klaus Franz, vice chairman of the Opel supervisory board and head of the works council, said in the statement that the change of the legal form "is an important milestone for Opel."
"The return to a stock corporation has been a core request from the employee representatives," Franz said.
GM transformed Opel into a GmbH in 2005 after more than 70 years as a stock company.
Under German law, a GmbH cannot be listed on a stock exchange, while an AG is eligible. Opel, however, will not go public and its only shareholder will be GM, a company spokesman said.
Reilly in the statement said the carmaker's financial position is currently better than planned because of the positive reception being given to Opel's new models.
“We are considerably ahead in the underlying business,” Reilly said earlier this month. “We have more volume, and average transaction prices have gone up based on new products.”
GM Europe is the only unprofitable division of GM following the Detroit-based carmaker's reorganization that included shuttering or selling four brands worldwide including Saab's sale to Dutch supercar maker Spyker Cars NV in February.