GM To Axe Jobs At Opel

GM executive Bob Lutz, who has been a senior executive in the car industry longer than any man alive, will become the new chairman of Opel. GM has decided to keep ownership of Opel and British car company Vauxhall after months of negotiations to sell them.

Lutz told Swiss Sonntag newspaper that he is likely to stick with earlier plans to cut overall costs  at Opel by 30%.  That will probably mean that 10,000 of Opel’s 50,000 workers will be fired.

Lutz’s comments are a sign that the auto industry is still obsessed with the idea that it can cut costs as a way to bring prosperity back to the sector. GM, Ford (NYSE:F), and Chrysler have fired hundreds of thousand of workers over the last decade. That in and of itself has not kept the companies profitable. It has helped destroyed the economies of the Midwestern part of the US.

The “downsizing” of Opel is also a sign that GM does not see any significant rebound in European auto sales, at least in the near term. The No.1 car company in the US only expects its domestic sales to rise very modestly next year. It clearly has the same concern about Europe. That leaves China as the only region where GM is doing well.

The cuts at Opel are another example of the fact that layoffs by large US and European companies are not over and that the economies in the developed nations still face rising unemployment which could reverse the modest improvements in GDP that were posted for the third quarter.

Douglas A. McIntyre