Opel to cut working hours and offer early retirement in further cost-cutting drive

19 December 2017

Vehicle manufacturer Opel has reached an agreement with unions to cut working hours and offer early retirement packages to its employees.

The news comes as new owner PSA Group, which acquired the German manufacturer, and its British counterpart Vauxhall from General Motors in August, looks to cut costs across the company following years of losses. It unveiled its turnaround plan, PACE! in November.

Opel said it had agreed with the union IG Metall to cut hours in the engineering and administration departments for at least six months starting from 1 January. Starting in April, the work week for the company will also be shortened to 35 hours.

The agreement also covers a new joint structure for the purchasing organisations of Opel and PSA’s existing brands to cut costs by increasing economies of scale. In the long term, the company believes that 30% of savings from the integration of Opel into PSA will stem from procurement.

Michael Lohscheller, CEO Opel, said in a statement: ′ At this moment we create the requirements to implement PACE! even faster. It is our joint goal to make Opel competitive again. It is therefore important that the management, the Works Council and the IG Metall work together through co-determination. With the agreement for Germany, the parties have defined a joint way forward and decided on important cornerstones. This once again underlines our intention to avoid plant closures and forced redundancies.’

Wolfgang Schäfer-Klug, chairman of the General Works Council, added: ′With this agreement, we have created an important social framework for the Opel workforce. Under difficult conditions, attractive measures such as a senior leave agreement and early-retirement regulation could be agreed. It is also important for the next steps that the co-determination and collective agreements could be comprehensively considered.’

As part of the agreement, employees born between 1957 and 1960 will be offered the possibility of early retirement. Workers close to retirement age will be offered a package to leave the automaker immediately. Opel did not say how many workers would be affected. The company employs over 37,000 people, including more than 19,000 in Germany, according to its website.

PSA has given Opel until 2020 to return to profit as part of a recovery plan aimed at shifting the brand’s model line-up onto PSA’s architecture, with the French parent pursuing €1.7 billion in savings from its purchase of Opel. The French company is also looking for a partial refund of its payment to General Motors over the potential for the company to miss European CO2 targets, due to the emissions plan put in place by the US company.

Carlos Tavares, CEO of PSA Group, has been vocal in his need to make the German manufacturer more efficient. Earlier in 2017, the company cut 400 jobs at Vauxhall’s Ellesmere Port plant in the UK, home of the Astra, due to the plant’s inefficiency.