Fixing Opel Will Cost More Than A Billion And More Than A Couple Of Months

Opel Chief Karl-Friedrich Stracke told reporters that an agreement with unions about a fix of money-losing Opel is a while away. "I expect this not to happen in a month or so, rather than in a couple of months, that's at least how I see the timetable," Stracke told Reuters. Analysts think that Stracke is an optimist, and that restructuring Opel won't come cheap. The guesstimate is more than $1 billion, and the payback will take a while. "The cost is likely to be steep and the savings not immediate," Joseph Spak, an analyst at RBC Capital Markets in New York, wrote as lead author in a note to investors today. RBC estimates European restructuring expenses of $600 million this year and $400 million in 2013. GM's European business lost $747 million last year after losing $1.95 billion in 2010. According to Bloomberg, the analyst consensus is that this year, there will be a $1.2 billion deficit. Cutting 4,000 jobs in Europe will cost GM anywhere between $1 billion and $1.2 billion, or $300,000 per job, the analysts estimate. It could cost more. The unions have contracts that rule out plant closing or firings until 2014. European Unions will demand their share of the $9.19 billion GM had as a profit in 2011.   from The Truth About Cars http://www.thetruthaboutcars.com

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