General Motors has reached an agreement that will step up the pace of the restructuring of its European operations by selling off the GM Powertrain operation in Strasbourg, France.
The plant is being sold to Punch Metals International, a private-equity company controlled by the industrial investor Guido Dumarey. Terms of the deal were not spelled out but GM stressed the company’s responsibility vis-as-vis its employees and community.
Adam Opel AG, GM’s principal subsidiary in Europe, announced plans to close an assembly plant in Bochum, Germany next year. It’s one of the more aggressive steps in a desperate turnaround plan put together by GM vice Chairman Steve Girsky who has been charged with reversing more than a decade of severe losses at GM Europe — the maker recently forecasting it would post another deficit of as much as $1.4 billion in Europe for 2012.
GM is clearly sensitive to the complaints from European union and political figures about American-management practices that consider workers as disposable. Punch Metals will acquire the entire Strasbourg operation from GM, including the production plant, the engineering center and the die casting operation. All current employees of the operations will be maintained by the new owner.
In addition, the transaction includes a long-term supply agreement with leading automotive supplier ZF. ZF will purchase transmissions from the Strasbourg facility.
GM will continue to be a customer of the Strasbourg operations during the 2013/2014 period in order to enable the facility to maintain a robust level of activities and to provide for a smooth transition to the new ZF-based product line without impact on employment.
Punch Metals plans to make substantial investments into the facility in order to further upgrade its capabilities with the objective to attract additional profitable business from other customers.
This announcement follows the strategic review of the Strasbourg facility that GM began in May this year. Following a thorough review process, the three companies are pleased to have reached an agreement that secures a long-term viable future for the operations and their employees.
GM’s top management has made turning around the fortunes of the company’s money-losing European operations one of the companies top priorities. GM has lost money on it European operations every years since the late 1990s.
Senior GM officials, however, note that Opel was once the most profitable car company in the world. Critics, however, note the profits then were earned during the rebuilding of the German economy that followed the fall of the Berlin Wall.