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Agreement on Opel Plan for the Future

2010-05-21

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Rüsselsheim.  Opel/Vauxhall management and employee representatives reached a European-wide tentative agreement in support of the company’s Plan for the Future. The agreement, which is geared towards building a sustainable future for Adam Opel GmbH, is based on detailed investment and production commitments for an attractive product portfolio as well as on strengthening the International Technical Development Center in Rüsselsheim within the global GM product development network.

The core part of the agreement is the development and introduction of new products, such as a new small car below the Corsa. An exact timetable has been set for this. This product plan builds upon Opel’s announcement early February, when the company said it would invest €11 billion into new products, alternative propulsion systems and other growth initiatives.

Agreement was also reached on labor cost savings of €265 million annually across Europe, with €176.8 million of that coming from Germany. In case some of the planned new products cannot be realized, the cost savings that are initially put in escrow, will be returned to the employees.

Both sides agree that Adam Opel GmbH will be transformed into an AG (incorporated company).

Both parties are aware that job reductions are necessary. The measures will be implemented site-specifically and reviewed with the local employee representatives. Once this restructuring is completed, the company will be able to avoid forced redundancies for the period of this agreement.

The company’s European Employee Forum (EEF) laid the foundation in its meeting last Wednesday; the framework agreement is now being discussed in the individual European countries; a formal ratification is expected to take place in the next few days.

In addition, Opel management and employee representatives have reached a framework agreement for the company’s German locations in Rüsselsheim, Bochum, Kaiserslautern and Eisenach.

 “This European framework contract and the specific agreements in each country, including Germany, are important steps along the way to a new and successful company,” says Opel CEO Nick Reilly. “It is gratifying to see that both management and employee representatives can work together and share the common vision of a successful future.” Works Council Chairman Klaus Franz adds: “By virtue of their agreement, employees demonstrated that they are ready and willing to contribute to the company’s future when they are offered security and long-term prospects in return. That way, the prerequisites for government guarantees are fulfilled as well.”

Both sides clearly stated in the framework agreement that the employee contributions are just one part of the whole financing concept – the other parts are comprised of funding from the parent company General Motors and loans for which the company has requested government guarantees. The implementation of cost reduction initiatives measures will be distributed across all European locations as fairly as possible.

Fast implementation at individual sites

The principles of the framework agreement will now be quickly implemented through local agreements at the individual sites. This includes details regarding an employee profit scheme as well as a separate labor contract including flexible shift patterns in engineering.

In Germany, cost savings consist of the following elements:

One-time payment: The one-off payment slated for the time period from May 1, 2010 to March 30, 2011 totalling €320 gross (apprentices: €120 gross) is eliminated.

Non-proliferation of salary increase: Tariff contract talks for the metal and electric industry in February 2010 resulted in a planned salary increase of 2.7% as of April 1, 2011. This increase will be postponed until January 31, 2012.

Reduction of vacation and Christmas bonus: Vacation and Christmas bonuses for 2010 and 2011 will be reduced to 50 percent of the current arrangement.

Similar agreements are being put in place at the other European sites.

Cost reduction, but also investments in products

Nick Reilly: “The negotiations were not easy. The company was damaged by the global crisis and has to restructure to recognise a lower industry. On the other hand, we need to keep innovating in new technologies and products to maintain Opel/Vauxhall as a leading European automotive company that can compete worldwide. I totally respect the union’s important partnership in the company going forward and am grateful to the employees’ willingness to contribute to the cause. They will be rewarded by ongoing employment and the chance to share in the economic revival of the company. In the end, everyone involved had the best interests of the company in mind. Now we have a common base for profitable growth.”

Klaus Franz: “The cost reductions we agreed to are offset by management’s commitments and the collateral the company has put up. In return, we will see fresh investments, new innovative products, better job security, co-determination and a change in the company’s legal form. That way, Opel and its employees have promising prospects for the future.”

Both Reilly and Franz expressed gratitude for the support of governments that have committed to help in partially guaranteeing bank funding as well as to General Motors for its continuing financial and other support.