Since 1999 General Motors has lost $15.6 milliard; that is a rough-average of $1,000 million a year. Three years ago the company looked at off-loading its European operation but due to political interference from politicians in Europe it was not able to conclude a deal. A year later, it sold its Saab subsidiary to Spyker, which has struggled with the burden, and was driven to bankruptcy in December just last year. Spyker was unable to raise necessary funding in these times of austerity in the Western World. It had therefore looked to China but there is a widespread recognition of a problem with the Chinese record of not respecting intellectual property. General Motors has a considerable amount of intellectual property on licence to Saab which Saab is totally reliant upon for success. Not surprisingly then, General Motors would not authorise involvements that would put their intellectual property at risk of dissemination.
If a willing buyer can be found for the General Motor's remaining European business in these increasingly harsh economic times, then General Motors would be doing well to sell. Obviously they cannot sell to an entity that would put the intellectual property at risk, and that rules out the most significant sources of liquidity currently available. The chance of finding a willing buyer, though, when there is such political interference from German vested interests, makes such prospects very slim. A new owner who views the Vauxhall-Opel business in its own right, rather than as an adjunct to another brand, could make a go of it: this would give the best hope to the company, let's hope a buyer is forthcoming.
The danger with GM restructuring its European operations is that, although the Ellesmere Port manufacturing plant in Britain was generally considered to be safe in any re-structuring, it is not anymore, and Luton certainly is not, and could easily be one of the plants to be closed if the company does not sell. Another, or two, plants in Europe would also be at risk immediately, and others in the future. General Motor's European operations in the last sixth of a century has had a disastrous cost on the company. General Motors has an eighty-five year record in Britain and Europe, and for much of that history was very successful, but that is the problem, sentimentality is over-ruling good business sense. So desperate is General Motors to retain market-share that it is clinging onto mere statistics that boost its grandiose appearance, rather than being smaller and more profitable. Although there are some circumstances where it is worth having loss-leaders, it is not sensible in an entire market place, on the scale in which General Motors is doing it, or for so many years. Whatever plants close now as a result of restructuring would be unlikely to arrest the losses and prevent the eventual inevitable further closures.
That General Motors is making a loss now is all the more worrying, in what could be considered the peace before the onslaught on competitiveness in the car manufacturing industry, as the Chinese are about to flood the European market with their cars, making General Motor's losses even greater.
If plants are closed as part of the restructuring plan currently under consideration, then there must be a political backlash. Any closure would mean permanent loss to the industry, and a further degradation of manufacturing in this country. The loss of a manufacturing plant to the British car making industry overall, would be disastrous as it would further erode the critical mass which makes the component supply industry viable, which in turn makes the British car manufacturing industry itself viable. This would, ironically, be at a time that the Government is promoting an initiative to strengthen the supplier industry, in order to keep both it and vehicle manufacturing viable. General Motors say they have kept the Government and the unions appraised of the restructuring plans, it will be shame upon such politicians if that includes downgrading any of General Motor's operations in the UK.
The problem is going to be the vested interests of German unions, politicians and industry, and the fact that the European Union is weak on fairness: all of Britain's industries have seen that there is not a level playing field in Europe; General Motor's ongoing losses now are clarion to that..
If General Motors does not sell to a suitable buyer then the chances are that in just a few years, Vauxhall Motors, one of the few remaining British car marques, will follow a long list of illustrious names, and will be no more.