GM Europe
Initiates Major Restructuring Plan
Zurich
- General Motors Europe today announced a major restructuring plan to
improve its market position and return its business to profitability.
This
year's downturn of the Western European vehicle market and GM's market share
performance in many of the individual countries, combined with shifting
consumers' preference to smaller vehicles, and intensified downward pressure on
vehicle prices, led to a 3rd quarter loss of $181 million. With industry
conditions continuing to deteriorate, a much larger loss is expected for the
4th quarter.
This
restructuring plan, combined with continued investment in an aggressive future
product program has the objective of generating savings sufficient to return GM
Europe to profitability.
In the
manufacturing area, Vauxhall intends to undertake a major restructuring of its
manufacturing operations. It is proposed that in Luton, production of the
Vectra would move to one shift early in 2001, and would cease at the end of the
life of the current Vectra model, which will be by the end of the first quarter
of 2002. From this point forward, the remaining Luton facilities would
concentrate on commercial and offroad vehicles, while passenger car production
would be concentrated at Ellesmere Port. This means that the new medium-duty
van, the Vivaro, and the Frontera would be produced at Luton. Ellesmere Port
will continue to produce the Astra and a study is being made to possibly
incorporate the next-generation Vectra and turn the facility into a two-model
flex plant.
In total,
these specific actions in the UK, and those previously announced, including the
“leanfield” conversion of Opel’s Rüsselsheim manufacturing site, will reduce GM
Europe's installed capacity by more than 400,000 units between now and 2004.
Going forward, capacity utilization across GM’s European operations will
continue to be evaluated. In addition, lean manufacturing implementation will
be accelerated across all European plants, to obtain the productivity levels
currently demonstrated at Opel’s benchmark Eisenach facility.
In the
sales, marketing and administration areas, GM Europe intends to drive
efficiency measures and to achieve significant savings at the national sales
offices in the various European countries and regions. The migration of certain
financial and administrative functions to the company's European Financial
Shared Services Center in Spain announced in May of this year will be accelerated,
so that projected savings will be achieved earlier.
Taken
together, these various restructuring activities, as well as a number of other
actions, are expected to reduce overall employment levels in Europe by more
than 5,000 people within the next 18 months, consistent with the objective of
reducing salaried headcount by 10 percent by the end of 2001.
Another
portion of the planned savings will come from further material cost reductions,
driven in part by synergies derived from GM's recent alliance with Fiat. In
addition, improvements in current product material cost will be accelerated by
the establishment of a dedicated joint purchasing/engineering project team that
will work with GM Europe’s supplier communities.
With
regard to product development, it is planned to maintain investment levels that
have increased in the past few years to support an aggressive future product
line-up for GM Europe’s brands. Opel/Vauxhall are currently reevaluating their
future vehicle portfolio, in order to focus on delivering more innovative,
segment-defining product entries. As an initial consequence, Opel decided to
discontinue plans for the introduction of an Omega V8 version. Saab, over the
next five years, will considerably enlarge its product offer in line with its growth
strategy for Europe and the U.S.
Michael
J. Burns, President of General Motors Europe, said: "The restructuring
plan announced today is far-reaching, but essential for bringing the company
back to profitable growth. The reduced cost base, combined with our aggressive
new vehicle portfolio focus, will ultimately provide the best guarantee for our
future success."