DETROIT -- General Motors CEO Dan Akerson earlier this month reiterated the need for GM to reverse its losses in Europe and said the region suffers from a glut of automotive production capacity.
His comments, made during a moderated discussion before business leaders here, were another signal that GM plans further cost cuts to stem persistent red ink in Europe.
"When you're running your plants at a utilization of anything less than 100 percent -- and in most of Europe they run at 85 percent -- you're trying to bend the demand curve to beat the supply curve," Akerson said at a Nov. 17 luncheon hosted by the Detroit Economic Club
He said that situation mirrors GM's problems in the United States just a few years ago -- problems that helped push the automaker into bankruptcy in 2009.
"You're oversupplying to cover your fixed costs, which means you overproduce, you cut price to take or hold share, you start dumping your excess into fleets, which ruins your residuals," Akerson said.
Earlier this month, union leaders in Germany expressed anger over GM CFO Dan Ammann's comment that nothing was "off the table" in restructuring GM's European operations, including closing plants. Ammann was appointed to Opel's supervisory board this week.
Opel's top union leader, Klaus Franz, said he was "astonished" by Amman's remarks, saying GM's current labor deal in Europe barred factory closures and job cuts through to 2014. Franz announced he will retire from his post at the end of the year.
GM, which gets about 17 percent of sales from Opel, its European unit, said it reduced its third-quarter loss in Europe to $292 million, from $559 million a year earlier.
But that followed a profitable second quarter there. And the region's deteriorating economic outlook prompted GM to back off its goal of breaking even in Europe for the year, before restructuring costs.
Through the first nine months of this year, GM has cut 5,800 jobs in Europe and recorded $900 million in restructuring costs there, the company said in its regulatory filing this month.
Control costs, boost revenues
Akerson wouldn't detail GM's plans to stem losses but said the company will focus both on controlling costs and generating revenue by offering better products. Twice, he mentioned PSA/Peugeot-Citroen's plans to cut 5,000 jobs in France, which was disclosed this month by a union official.
"Clearly you can't have a unit as important as Opel is to General Motors chronically unprofitable," he said.
Akerson also said that he's "very concerned about" Europe's sovereign debt problem, not only because of its effect on sales in that region, but the possibility that it could infect the U.S. economy.
Europe's debt crisis is a "more serious" situation than the U.S. housing bubble three years ago that preceded a global recession, Akerson said.
"The '08 recession, which was a credit bubble that manifested itself through primarily the real estate market, that was a serious stress," Akerson said. "The government took some insightful actions. This is much more serious."
Reuters, Bloomberg and Douglas A. Bolduc contributed to this report