GM Europe/Opel CEO Unexpectedly Steps Down, GM Vice-Chairman Takes Over

General Motors Europe (GME) has undergone its second change of leadership in just over six months, announcing that GME president Karl-Friedrich Stracke, who also held the position of chairman of the Opel/Vauxhall brands, will step down from both roles to take on a position working on special assignments, where he will report to GM chairman and CEO Dan Akerson. In the meantime GM's vice-chairman and chairman of GM Europe's supervisory board, Steve Girsky, will become acting executive head of GM Europe's operations while the company searches for a full-time replacment for Stracke. In the statement, GM CEO Dan Akerson said, "Karl Stracke worked tirelessly, under great pressure, to stabilize this business and we look forward to building on his success. We appreciate Karl's many contributions to GM's success." Stracke himself was quoted as saying, "I am leaving my current position knowing that Opel/Vauxhall has a bright future. And I am looking forward to taking on new challenges for GM and Dan Akerson."

Stracke is stepping down just two weeks after presenting a plan to the supervisory board (see Europe: 29 June 2012: Opel Board Approves Restructuring Plan Although Details Scarce; Ford's European Losses to Widen in Q2) that contained little in the way of material detail that would lead to the kind of signficant cost cuts that are required if Opel/Vauxhall is to start contributing positively to GM's overall bottom line. The company announced that it would implement a four-pronged plan, including the following elements:

• Investments in the Opel/Vauxhall product portfolio, combined with a new sales strategy;
• A revised brand strategy;
• Plans aimed at reducing material, development and production costs and further leveraging synergies from the alliance between GM and PSA Peugeot-Citroën, and
• A redefined export and market expansion strategy.

However, this announcement contained no details of the previously announced intention to allocate no further production to the firm's Bochum plant when production of the current generation Zafira ends in 2016, which would effectively ensure the plant's closure (see Germany: 14 June 2012: No New Production to Be Assigned to Opel's Bochum Plant After 2016, Closure Almost Certain). Given the fact that GME recorded a loss of USD747 million in 2011 and the European market is facing a further contraction in 2012, with its brands losing market share even within that declining market, the restructuring plan would appear to be inadequate in terms of addressing the unit's losses on a short-term basis, and the need to address excess capacity appears ever more urgent.

Outlook and Implications

It is hard to see any logical rationale for Stracke departing his roles as president of GME and CEO of Opel/Vauxhall this stage unless there is significant behind-the-scenes dissatisfaction with the progress being made with the restructuring plan. At present, just as GME and Opel/Vauxhall need to present an image of stability and everyone pulling in the same direction, with the same aims of dragging the unit back to profitability, the unit is replacing its top executive two weeks after he presented a restructuring plan to the supervisory board and the world. Even if there are compelling internal management reasons for the change, GM must accept that this does not play well externally in terms of how the company is perceived or how the restructuring is progressing. When the initial restructuring programme was presented two weeks ago, IHS Automotive criticised it for being sketchy in detail in terms of what was being announced in the public domain, and for the lack of elements which would make significant short-term reductions to GME's overall cost base, such as plant closures and job losses. Stracke had previously said that the company would abide by the original labour agreement implemented as part of the first round of restructuring, which was implemented throughout 2010 and 2011, and which led to the closure of the company's plant in Antwerp. This agreement stated that there would be no further plant closures or job losses before the end of 2014, following around 8,000 job losses as part of the original restructuring. However, this means that Opel/Vauxhall could still be open to further plant closures before the likely 2016 closure date that has been suggested for Bochum. Stracke's departure from his previous role would indicate that GM's US management simply wants to inject greater urgency into the restructuring process. All of the above elements are medium-to-long-term objectives, some of which will only result from the alliance with PSA, and may take years before they actually positively affect GME's bottom line. IHS Automotive's managing director of consulting, Michael Robinet, perhaps put it best. Commenting on Stracke's departure he said, "Change of leadership really denotes a new direction is required, maybe a new speed at which some of the changes will occur," he said. "It also signals to labour that it's a new sheriff in town."