General Motors has finally confirmed what has long been anticipated – that it intends to close the Opel plant in Antwerp, Belgium. In November 2009, when GM spared all of Opel’s German plants and confirmed the immediate future of Ellesmere Port, the fate of Antwerp appeared decided. Nonetheless, no official confirmation was made until this morning.
Unions have been protesting the closure and went as far as to offer an alternative business plan to retain Opel production at the plant. That plan, devised in conjunction with plant management, was backed with a €500m state aid package agreed in principle with the Belgian government, and purported to turn a net profit within seven years.
In November 2009, when GM spared all of Opel’s German plants and confirmed the immediate future of Ellesmere Port, the fate of Antwerp appeared decided.
What the plan failed to take into account was GM’s product and production plans. Antwerp’s fate was effectively decided when it failed to secure the contract to build the next-generation Astra. A small SUV had been considered for the plant. However, prospects of the plant winning that project were always optimistic and chances were further reduced when GM Europe president Nick Reilly made it clear that this work should go to GM’s South Korean subsidiary, GM Daewoo.
It had also been thought that GM would use the plant for the Ampera, the forthcoming European version of the Chevrolet Volt. The Ampera is still several years from production and only once the necessary supply chain is in place for that model can a production plant be confirmed.
A crucial factor in deciding the source of that model will be the close proximity of a battery plant, due to the transport regulations surrounding distances and volumes of EV battery shipment. With the Volt still to be launched in the US, decisions on the Ampera are a long way off. Keeping the plant operational until that time was never an option: the plant’s dependence on an outgoing model that has already been replaced by production at other plants ruled out any chances of an extension of the kind used by Fiat/Chrysler for the PT Cruiser.
By the beginning of 2009, GME’s overcapacity problem was such that it began talking openly and seriously of its overcapacity in terms of an equivalent number of plants.
Furthermore, GM needs to cut overcapacity in Europe and has said it aims to slash capacity in the region by 20%. By the beginning of 2009, GME’s overcapacity problem was such that it began talking openly and seriously of its surplus capacity in terms of an equivalent number of plants. According to a recent capacity utilization study published by AutomotiveWorld.com, GM saw its level of overcapacity in Europe rise dramatically in 2008 compared to 2007, by 175% to 705,091 units. This rose further during 2009.
The Antwerp plant has seen its capacity utilization rate fall in recent years, due as much to the recent economic downturn as to the run-out of its only product, the outgoing Astra. In 2009, the plant is reported to have built 88,873 units, made up of Astra (three-door and wagon) and the Astra Twin-Top. With an installed capacity of 300,000upa, its capacity utilization rate in 2009 came in at 30%.
In 2008, total output stood at 132,426 units and capacity utilization at 44%. In 2007, the plant had a 65% capacity utilization rate, when the plant built 196,315 units. To illustrate the plant’s long-term declining capacity utilization, we need only to look back to 2003 when 254,200 units were built.
Antwerp is certain to be the first of a host of plants to be shut down in the next few years.
Sadly, the plant’s closure is, in strictly business terms, convenient and necessary. Indeed, GM referred to the decision as a “Necessary next step in rebuilding Opel”. With the significant decline in vehicle sales across Europe and an overcapacity level in the European automotive industry in 2008 alone of 4.74 million units, Antwerp is certain to be the first of a host of plants to be shut down in the next few years.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
