If you ran a huge multi-national company like GM and one small part of it, like Opel/Vauxhall had made a loss every year since 1999 what would you do with it? You would sell it to the highest bidder. It looks like the bulk of the losses were generated by Opel so the UK's membership of the EU has nothing to do with it.
GM failed to build world cars and continued with regional models, unlike, say, VW, BMW, AUDI and Mercedes.
Vauxhall's losses are small as the Astra and the Luton built van range are, I believe, quite good in financial terms (i.e. they don't lose much).
Totally agree. The biggest problem Ellesmere Port and Luton will face is the content of locally produced components. If you take Nissan as an example they currently source approx 80% of their components locally i.e. within the same currency. The Nissan Board in Japan realised if they wanted to have a financially successful manufacturing plant in the UK they would have to source the majority of components in the same currency they were manufacturing in, and as a result they laid out a long term plan to achieve this. When Renault became involved they maintained this strategy and enhanced it and the results speak for themselves. Nissan Locally sourced in the 1990's 21% in 2017 78%.
GM headed up by the Opel brand in Germany took a different approach. They knew they could not alter working practices in Germany and they also knew they had a very high cost base, therefore, they decided to drive the costs of manufacturing down and they successfully achieved this in the UK. The Vauxhall management rose to the challenge and with the fantastic co operation of the unions turned the two UK plants into the most efficient GM plants in Europe. This strategy enabled Opel to continue manufacturing components in mainland Europe. The nett effect was the cost savings made in the UK are subsidising the high cost base of the Opel component plants in the rest of Europe. In the 1990's the local content for Vauxhall was slightly over 30%, in an interview given by Vauxhall's MD Tim Tozer in late 2015 he confirmed the local content had dropped to just under 25%. This is still the same today. The autocratic approach taken by the GM Europe board has played a significant part in its demise.
The options for Ellesmere Port and Luton are quite simple, increase local content, or renegotiate supply agreements or close the plants down. It would be devastating if after all the hard work and restructuring the plants closed, they do not deserve it. The one thing is certain if they don't restructure the UK operation it will not survive because they cannot afford to continue to purchase overpriced components in Euro's when their competitors are sourcing locally in Sterling.
Since the late 1990's when GM started down the road on trying to dispose of GM Europe they have invested just enough to keep it afloat; relying on the goodwill and hard work of their European employees to achieve this. Its not been helped at all by the significant losses in the USA plants. On June 1st 2009 General Motors filed for Bankruptcy in New York, with $82 billion in assets and $173 billion in liabilities. It was the largest bankruptcy in history. The losses in Europe are a pittance in the context of this and as such are very real. The hardworking GM Europe staff have been let down by underinvestment from the US (they didn't and still don't have the money) and the dogmatic approach of the Opel board to not grasp the nettle and reduce mainland Europe costs in the same way the UK plants have.
Whatever people think of the marketing strategy and woeful model line up of Vauxhall, the UK manufacturing plants are up for the challenge, given a revamped model line up within a European PSA/Vauxhall/Opel model range they could make a very valuable contribution and because they are UK based they will be able to take advantage of being outside of the EU Customs Union and sell to the rest of the world at more favourable terms than the EU, but to achieve this, they will need to alter their business model and significantly increase local manufacturing content.
