03-15-2012, 10:17 AM
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GM May Close Euro Plants After Investing $400M In Peugeot
General Motors CEO Dan Akerson sat down for an interview with Fortune Magazine’s Adam Lashinsky and admitted that the Detroit automaker might close some of its European plants. “In the U.S., GM was able, through an extraordinary set of circumstances, to take some drastic action: you closed whole factories, you closed whole historic brands in the United States. Can you take, and will you take, drastic action like that in Europe?” Lashinsky asked.
Ackerson responded [emphasis added]:
Well, just so you understand, prior to their kind of crisis of confidence, if you will, Europeans must, uh, we in America hear about it every day, they must hear about it every morning and every evening of every day.
And is Greece going to go under? Is Italy going to go under? What’s going to happen to the euro? The banks are on stilts…it has echoes of what was going on here 2008 and 2009. Coming out of bankruptcy, [GM] did close a plant. There are only two plants closed in Europe. Fiat closed one and we closed one in Antwerp, Belgium. We laid off about 4,000 people and were were profitable for the first half of 2011 in Europe.
Now we, Ford , Fiat, Pugeot, Renault — they’ve all come out and said, ‘Yeah, we have profitability problems in Europe.’
And you’re right. We had to close 14 plants in the United States when we had our crisis.
We think we’re going to have to adjust our production levels in Europe over the next couple of years in order to get our house in order in Europe.
Akerson agreed with Lashinsky that the statement, “‘Adjust production levels’ is often a euphemism for closing plants.”
Akerson said that “we are in discussions with our stakeholders, our employees, our unions–” regarding the time-frame for these shutdowns and agreed that it’s “very difficult to close facilities in Europe compared to the United States.”
“And we are going to abide by our contracts but we have to at least start to get them in place so we hope that in the next two to three months we’ll be able to publicly articulate a plan that will get us back a shot at profitability.”
“And is eliminating a whole brand in Europe, such as Opel, is it an option the way you did in the United States?” Akerson was asked.
“I don’t think so. But you think about the United States, we had eight brands!”
He explained that since it restructured and eliminated some of its “historic brands,” GM has turned Buick into something of a success story. The CEO concluded by promising to do everything to make sure the German automaker Opel remains profitable.
Given the fact that even the CEO admits there are “profitability” concerns in Europe, why did the Detroit automaker, which still owes U.S. taxpayers approximately $25 billion, invest $400 million in France’s fledgling Peugeot?