Opel shuffle
January 15, 2010
Top General Motors executive Nick Reilly has been named the new chief executive of Germany's Opel as well as its sister concern, UK-based Vauxhall, GM announced on Friday. Reilly replaces Hans Demant, who will take on a new job overseeing intellectual property rights.
60-year-old Reilly, who is British, is currently president of GM Europe. He takes on the top job as Opel struggles to survive the severe crisis facing the auto industry. A respected executive who has held a variety of posts in his 35-year career at the Detroit-based carmaker, Reilly is to unveil a major restructuring plan by the end of the month that could see up to 9,000 job cuts.
"His most important quality is his flexibility," Christoph Stuermer, an auto analyst at IHS Global Insight, told Deutsche Welle. "He has done well in every position he's held."
Stuermer and other analysts say Reilly's style, his ability to listen and delegate and his reputation as a tough but fair man when it comes to restructuring programs, make him a good choice for the job.
"Opel has a history of hatching restructuring plans that either haven't been implemented or haven't been successful," said Stuermer. "Opel very badly needs a successful strategy now to survive."
The restructuring plan now being worked out is a necessary basis for GM in its negotiations with European governments over possible state support to help overhaul its Opel operation. GM has said saving Opel will cost about 3.3 billion euros, and hopes to get 2.7 billion euros in state support.
Long story
The management change is the latest key development in the long-running saga of GM and Opel. General Motors, itself struggling, had once announced it would sell its majority stake in the German unit as part of an overhaul of its global business. A deal was worked out, backed by Berlin, for a consortium headed by Canadian auto parts maker Magna to buy that stake.
But in November GM announced it would retail Opel, a reversal which outraged workers and politicians in Germany who feared massive job cuts. Reilly was able to step in and quell some of that anger.
"Reilly has done well in that he has generated sympathy instead of antipathy in Berlin and among the public in the weeks after Detroit announced it was keeping Opel," said Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen. "He is a good communicator, which is important right now."
In other personnel changes, Mark James, also from the UK, will take over as chief financial officer. Rita Forst, head of Opel's technical development center, was appointed head of engineering. Reinald Hoben takes over as head of production and Alain Visser will be Opel's sales and marketing chief.
The new board "will address tasks quickly and with plenty of energy," Reilly said in a statement. "We in particular will be on the offensive and will want to increase our market share in Europe."
Road ahead still rocky
Despite the new optimism, Opel still faces considerable challenges.
On Friday, data released by the European Automobile Manufacturers Association showed Open and Vauxhall sales dropped 7.8 percent in 2009.
Opel also said on Friday that around 12,000 of its workers, half of its domestic German workforce, will work fewer hours in January and February due to slumping sales. A spokesman told AFP it will represent a "few days" of unemployment per month.
"We are in an economic crisis and we have to adapt," the spokesman added.
Reilly will also have to convince Opel's workers' council of the need to accept job cuts that the carmaker proposed in late December. The council, which includes union officials, rejected the plan.
"The next few weeks in the European auto sector are going to be very interesting indeed," said analyst Stuermer.
Author: Kyle James
Editor: Sonia Phalnikar