Fate of Hungarian Opel plant may be decided on Thursday

November 8, 2017, 12:10 pm  english version Hungarian version  
Opel CEO Michael Lohscheller is scheduled to present the key points of the company’s new restructuring plan at a press conference on Thursday, Frankfurter Allgemeine Zeitung reported. PSA Chief Executive Carlos Tavares will also attend.

Guesswork about Opel’s future has been on since General Motors sold its Opel and Vauxhall brands to PSA Group for 2.2 billion euros this March. The deal was a game-changer for Europe’s vehicle assembly footprint. The German paper has recently reported more information about the announcement to be made:
  • Opel's technical centre in Ruesselsheim will become a competence centre for engineering services, focusing on the partial or complete electrification of all PSA vehicles.
  • All future Opel models also will be based on PSA technology, using the French automaker's platforms, engines and transmissions. This will help Opel to achieve fuel efficiency and CO2 reduction targets that it is expected to miss with its current drivetrains.
  • PSA will also expect Opel to cut its labour costs and to reduce heavy discounting and self-registrations to ensure its cars are sold closer to the list price.
  • Opel will target breakeven in 2019 and a 2% operating margin in 2020, FAZ reported on Monday. Opel has been in the red since 1999.

The French could close three plants

The French-German automaker’s network includes 18 plants that stretch from Portugal in the west to Kaluga, Russia in the east. In the past, PSA had 12 factories and Opel/Vauxhall had six. With 18 plants PSA-Opel is now tied with Renault-Nissan for second place in the ranking, following Volkswagen Group. Based on 2016 sales, PSA and Opel carved out 16.6% of the European car market.

How long PSA-Opel will remain tied for second place in the plant ranking is an open question, though.

The French pledged at the deal that plants would not be closed and workers would not be laid off. Yet, as a consequence of a drop in demand for Opel Astra models, PSA now plans to cut 400 jobs at one of the factories it inherited from GM, reducing production of the Opel/Vauxhall Astra to a single shift from two now in Ellesmere Port, England. There is no word on the future of Vauxhall's two UK factories in Luton and Ellesmere Port.

Analysts believe that PSA could close up to three European plants by 2021-2022 to improve capacity utilisation. Opel's factory in Eisenach, Germany, and PSA's factory in Villaverde, Spain, could be shut and their production moved to other PSA plants, experts say.

A lot of people have already been let go in Hungary

For the second time in a short period, workers in Opel's factory in Szentgotthárd have been informed of significant lay-offs involving nearly 100 workers. The company confirmed the news to daily Magyar Idők, while the local government is already calculating lost tax revenue.

Changes in output volume are expected to lead to further cuts to the headcount employed through temp agancies,

Zoltán Kaszás, spokesperson for Opel Szentgotthárd, confirmed.

03/11/2017 1:53pm
Opel to lay off 100 workers in Hungarian plant

Changes in the output volume refer to lower orders from within the company. The Hungarian factory supplies engines to final assembly plants, and if PSA-Opel makes less cars, the volume of orders drops.

Municipality concerned

News of the lay-offs and the lower production alarmed not just the plant's workers but also the local government, which collects nearly HUF 1.5 bln in local business taxes from Opel. This compares to a total annual budget of HUF 2.6 bln for the town.

It is no wonder that town management are trying to devise an emergency plan.

Local leaders are now trying to find ways to plug the hole, mulling ways to hike some local tax or impose a new one to make up for the amount of business tax lost from Opel. One councilor estimates the new income could reach HUF 600 million or 40% of what Opel had paid.

A rumour has been on the market that PSA’s management will want to use nothing else but its own engines in Opel models too. If it does manage to do so, the long-term operation of the plant in Szentgotthárd can be secured only if a deal is cut with the French that instead of Opel engines PSA will have its own engines manufactured at the Hungarian unit. It could also be an option if PSA had its electric motors or other parts of electric drive trains produced in Szentgotthárd. It is also true, though, that there would be huge competition among the plants of the group for such a major deal.

Front page photo by MTI/ György Varga

Previous  Previous Next  Next

Home / Companies / Fate of Hungarian Opel plant may be decided on Thursday