Opel CEO Stracke Resigns In Middle Of Turnaround
FRANKFURT, Germany (AP) — The CEO of General Motor's lossmaking European business has abruptly stepped down, just two weeks after presenting a new plan to turn the struggling Opel and Vauxhall brands around.
Adam Opel GmbH said in a statement that Opel CEO Karl-Friedrich Stracke would stay with GM and take on special projects, reporting to GM head Dan Akerson.
The company added that GM Vice-Chairman Steve Girsky, who is the head of Opel's board of directors, would serve as acting head of GM's European operations while looking for a replacement for Stracke, a veteran GM executive.
The US automaker has made clear it is determined to return its lossmaking European business, which includes Opel and the Vauxhall brand in Britain, to profitability despite tough competition among mass-market carmakers.
GM's European Opel and Vauxhall units have been a drag on the company's earnings for a dozen years, including a $256 million loss in the first quarter and $700 million last year.
Stockholders and analysts have questioned whether GM is moving fast enough to stem the losses and restructure its European operations, which have too many factories and workers.
GM rode strong North American profits to earn $1 billion last quarter, but its profit margin was 5.8 percent, well below the 10 percent margin typical of Hyundai or Volkswagen, the top industry performers. Akerson has said he wants to raise GM's margins closer to the leaders. Profit margin is the proportion of revenue that's left after costs such as labor or raw materials.
Akerson said in a statement that the 56-year-old Stracke "worked tirelessly, under great pressure, to stabilize this business and we look forward to building on his success."
The Opel statement quoted Stracke as saying "I am leaving my current position knowing that Opel/Vauxhall has a bright future."
The automaker in the midst of a difficult effort to turn round its lossmaking Opel and Vauxhall businesses in Europe. A partnership with PSA Peugeot Citroen offers a chance for cutting costs but will not show results for several years. Meanwhile, Opel is barred for now from closing plants in Germany to cut excess capacity.
Stracke's departure comes two weeks after the Opel board approved a new overhaul plan at its June 28 meeting. The company said it is looking to add new models in segments in coming model years where it currently has no offerings, seek new markets in emerging economies, and look at moving other GM production to Europe to make best use of plant capacity.
Opel has also said it was in talks to guarantee German workers jobs through 2016, after which the closure of the plant in Bochum, Germany, was widely expected. In return, workers gave up a 4.3 percent wage agreed in industry-wide negotiations. German labor contracts had tied the company's hands, barring layoffs through 2014.
The company has also agreed on a partnership with France's PSA Peugeot Citroen, but that effort will take several years to bear fruit. The alliance is to focus on sharing platforms — the basic mechanical foundations — and parts modules to save costs from larger volumes, but the first common platform was not expected to launch before 2016.
Bochum is an older, higher-cost, facility but factory closings are expensive and politically difficult in Germany, where severance costs can be high, worker representatives sit on company boards and unions have political clout.
AP Business Writer Tom Krisher contributed to this report from Detroit.