* Abrupt management reshuffle latest GM u-turn
* Zig-zagging policies cost confidence of consumers
* Analysts see time running out for Opel as GM brand
By Christiaan Hetzner
FRANKFURT, July 16 Just hours after General
Motors abruptly fired Karl-Friedrich Stracke as chief
executive of Opel last week, industry observers were already
beginning to ask whether it was time to start writing the
troubled European unit's epitaph.
Since GM emerged from bankruptcy three years ago, Opel has
racked up $3.5 billion in underlying l osses thanks to an ever
shrinking European car market, a bloated fixed cost base and an
image that GM has helped bring low.
In the past four weeks, however, management and labour had
made promising signs of progress, approving a mid-term business
plan and agreeing to end production at a German factory in 2017
as the basis for restructuring negotiations. Morgan Stanley
analysts even began shifting their attention from GM's Opel
problems to those of Ford in Europe.
All for nothing as everything appears to be up in the air
again, including killing off the brand, even if company sources
argue one person's departure changes little. GM and Opel have
not commented publicly on the reasons for Stracke's removal,
other than to say he would "take on special assignments" at GM.
One industry observer believed GM CEO Dan Akerson was
following the advice of ex-GE boss and management guru
Jack Welch, who once said that if a company didn't measure up,
the only options were to "fix it, sell it, or close it".
"This will be the last such attempt under Akerson and since
GM couldn't sell Opel last time, they will just wind it down if
they can't fix it," said Ferdinand Dudenhoeffer, a professor at
the Centre Automotive Research (CAR) in Duisburg, Germany.
Armin Schild, a regional boss of the IG Metall union, which
negotiates on behalf of Opel's blue-collar workers, and one of
Opel's own supervisory board members, has already warned that
far more is at stake in upcoming negotiations than simply
swapping job guarantees for wage concessions.
If talks fail, "the overarching message then is there is no
agreement with IG Metall and that is possibly the beginning of
the end of the company," Schild told reporters late in June.
While Stracke's sacking may please investors on Wall Street
demanding quick results, observers in Germany have criticised
the timing as myopic and characteristic of GM executives who
lack commitment and strategic vision.
"Opel's problems won't be solved by managing it on the basis
of quarterly results. Either the owner adopts a long term
strategy and sticks to that plan or it looks pretty damn bleak
for the brand in the future," said Andreas Halin, Managing
Partner of GlobalMind Executive Search Consultants in F rankfurt
and an expert on corporate management.
GM has a history of abrupt u-turns that have damaged its
credibility. In September 2009, GM's board agreed to hand
control of Opel over to a consortium led by automotive parts
maker Magna in a deal brokered by Chancellor Angela
Merkel, only to change its mind weeks later.
Then GM spent months pressing for financial aid from four
German states where its manufacturing plants are located before
withdrawing the application.
And now GM Vice Chairman and Opel supervisory board chief
Stephen Girsky has removed Stracke less than a month after the
business plan was approved and a key logistics deal was struck
with France's Peugeot.
"The worst is that GM frequently changes course. Until
yesterday the strategy was to guarantee jobs through 2016, today
it is making cuts and closing plants as quickly as possible,"
"Why else did they get rid of Stracke? GM was not satisfied
with the business plan and the second quarter results were blood
red, so Girsky shot from the hip to save his own skin."
Ahead of tense restructuring negotiations that could last
through October, IG Metall's Schild put on a brave face in
public, calling the move on Friday "a chance that GM and Opel
must use to secure the future."
Sources at the company say nothing has changed apart from
Stracke's departure, but no reassurances were offered in the
statement on Thursday that Girsky would honour past agreements
and officials were slow to confirm he would.
A spokesman for Opel said on Saturday that neither the
business plan nor the goal of reaching an agreement with unions
before November over wage concessions in Germany were at risk:
"Both plans were not the sole accomplishments of one person and
thus not dependent on that individual, but rather the result of
the commitment of the entire management board as a whole."
While IG Metall said it welcomed the decision to install
Girsky as interim CEO, given his pull in the Detroit
headquarters, one person close to the talks admitted "we have no
certainty" whether GM might take a far harder position going
into the forthcoming negotiations.
The choices for Opel are now only becoming less and less
appealing as GM compounds the problems of a slumping European
car market and overcapacity with a leadership debate.
Wolfgang Meinig, head of the FAW automotive research
department at the University of Bamberg, says radical cuts are
needed now more than ever to nurse the company back to health.
"The most senseless thing a loss-making company can do is
maintain existing overcapacity and guarantee jobs under pressure
from unions and politicians - it's deadly, like a millstone
around the neck of someone drowning. There is only one way to
guarantee jobs and that's by earning a profit," he said.
Experts wonder whether Opel can survive such strong medicine
after all the upheaval and strategic zig-zags, or whether the
damage done to consumer confidence in the brand is irreversible.
"After all the wrong decisions taken, I really am concerned
whether it will still be around in 10 years time," Meinig said.
GlobalMind's Halin said that as well as turning customers
away through its heavy handed dealings with Opel, GM's inability
to stick with one plan would very likely harm staff morale.
"A manager has to be able to motivate one's team, to
credibly instil a spirit of optimism. But when one starts to
wonder if anything that top executives say only has a half life
of 24 hours, then a manager won't be able to perform their job
with the necessary conviction," he said.
"As a headhunter I know that the other German manufacturers
are wringing their hands looking for qualified workers. I am
sure Opel employees would be open to being poached by a
competitor and if I worked at Opel - whether I was a manager,
engineer or assembly line worker - I would immediately send my
application to Volkswagen or BMW," Halin said.