As if the ignition switch recall didn’t take a heavy toll on General Motors’ cash reserves, the U.S. carmaker is rumored to be preparing for another huge bill, this time involving its European operations.
The closure of Opel’s Bochum plant in Germany is reported to cost at least €600 million ($823 million), which makes one wonder whether it wouldn’t be cheaper to keep it running after all.
According to two sources familiar with the matter cited by Frankfurter Allgemeine Zeitung, the bulk of the sum (€550 million) includes the cost of severance payments and early retirement for the 3,300 employees in Bochum. Each of the employees is said to receive €160,000 ($219,500).
On top of that, GM will have to spend money on the cleanup of the factory site and the transferring of tooling in order to shift manufacturing of the Zafira MPV to the Rüsselsheim plant. The Zafira transfer alone is estimated to cost €50 million ($68.5 million).
Opel declined to comment on the German newspaper’s report, which said the company has already approved the restructuring sum. The report also said that the contract of Opel’s CEO Karl-Thomas Neumann has been extended until March 2018, following an initial one-year deal.
The Bochum plant’s closure is part of GM’s strategy to become profitably again in Europe in 2016, after more than a decade of losses.
By Dan Mihalascu
PHOTO GALLERY
