European Woes Still Increasing
This news does not look good at all and the problems seem to be increasing, with more closures, firings and lay offs it only increases the number of unemployed which reduces the GDP per capita and just makes things even worse. Is there a light at the end of the tunnel, that is not a train coming straight at us?
According to Anfac, the car manufacturers association, Spanish car sales fell 10 percent year-on-year in February. This mirrors January’s decline and the following stories do paint a very bleak picture. Company leaders do not typically talk of the bad side, and are mostly optimistic, but when more and more are talking the same talk we better listen closely.
Federal-Mogul plans to close plants in Europe after third straight quarterly loss
Federal-Mogul said today that it will shut more factories, mostly in western Europe, and shift the work by 2015 to lower-cost locations such as Mexico, China and Poland.
Last year, the Southfield, Mich.-based company announced a $60 million restructuring that included closing three plants by this July. Vehicle sales in Europe slumped to a 19-year low in 2012 and the outlook remains bleak this year.”This was really a very disappointing quarter,” said Brian Sponheimer, a Gabelli & Co. analyst in Rye, N.Y.
Sponheimer, who has a buy rating on the company’s shares, said Federal-Mogul “needs to effectively address its cash in 2013 and there needs to be a clearer path toward profitability” in its division that sell to automakers.
Federal-Mogul said in a statement today that it used $480 million more cash in 2012 than it took in, and ended the year with $467 million in cash.
The company’s fourth-quarter net loss narrowed to $80 million, or 81 cents a share, from $239 million, or $2.42, a year earlier.
The loss excluding items such as legal, impairment and restructuring costs was $41 million, Federal-Mogul said. The single analyst estimate compiled by Bloomberg was for adjusted profit of $15 million.
GM guarantees Opel jobs after unions agree to factory closure, pay freeze
General Motors Co. today agreed with labor leaders to guarantee the jobs of more than 20,000 German workers at the company’s Opel unit in exchange for the closure of the Bochum factory and a freeze in wages.Unions agreed to the closure of the Bochum at the end of 2016. The factory in Germany’s Ruhr valley manufacturing area builds the Zafira minivan and employs 3,300 workers.
German wage increases, put on hold in November as part of the negotiation process, will be postponed through 2015, Opel said in a statement. An agreement to refrain from large-scale firings until the end of 2014 will be extended through 2016 as part of the deal.
GM also will keep part of its facility in Bochum as a components and logistics center after auto production stops four years from now. The decision will secure about 1,200 of the location’s jobs.
“General Motors fully supports Opel and is securing the necessary financing for the coming years, until we can once again return to profitability,” Stephen Girsky, head of Opel’s supervisory board and acting head of GM Europe, said in the statement.
GM Europe, which includes Opel and the UK brand Vauxhall, has lost $18 billion since 1999, including a $1.8 billion deficit last year. GM reiterated targets on Feb. 14 for the division to improve earnings this year, helped by new models such as the Mokka and Adam, and to break even by 2015.
GM employs 40,000 people in Europe, including 22,000 in Germany. Girsky threatened in January to close the Bochum assembly plant by the beginning of 2015, two years earlier than planned, as no recovery is seen soon in Europe’s car market.GM’s efforts to return to profitability in Europe include a vehicle-development and parts-procurement alliance agreed to last year with Paris-based PSA/Peugeot-Citroen, Europe’s second- biggest carmaker. Projects will include sharing the underpinnings of three compact and small-car lines.
VW cuts bonuses to German workers by 4%
Volkswagen said it will pay its German workers a 7,200-euro ($9,400) bonus for 2012, a reduction of 4 percent on the previous year’s payout despite Europe’s biggest carmaker posting record profits and sales last year.
VW is reining in bonuses for factory workers and top executives at a time when the Wolfsburg-based company is bracing for tougher competition in its home and global auto markets. VW said last week that the group operating profit in 2013 may be flat.
The manufacturer’s supervisory board took steps last week to limit bonuses for top executives, capping CEO Martin Winterkorn’s total 2012 pay at 14.5 million euros.
A year earlier Winterkorn earned 17.5 million euros in fixed salary, bonuses and incentives which caused a public outcry in Germany about excessive manager pay.
Europe’s turnaround to take longer than U.S. rebound, Visteon CEO says
The auto industry’s turnaround efforts will take longer to gain traction in Europe than in the United States, where some companies were able to see the fruits of their plans within a year, Visteon CEO Tim Leuliette said.
The longer time frame partly stems from the fact that the severance pay required to lay off workers in some areas of Europe is higher than in the United States, Leuliette said in an interview.
Furthermore, companies have struggled to keep pace with the sharp, rapid deterioration in the economy as austerity measures and unemployment have hurt consumer spending.
“Everyone’s trying to pin a tail on the donkey, but the donkey does move,” Leuliette said, after the auto parts maker reported fourth-quarter earnings Thursday.
Europe is Visteon’s second-largest source of revenue. Last year, Visteon said it would make cuts in Europe and close plants around the world to cope with slowing demand.
