Next-gen Astra "world car" to cost GM $4.2 billion

The new Saturn Astra will be hitting US shores in the 4th quarter of 2007, but an even newer, more global c-platform vehicle will follow for the 2011 model year. The vehicle, which will be built in England, Germany, Sweden, and Poland, will be a truly global small car for the General, which helps GM lower tooling and component costs. Speaking of money, the cost of GM's global small car program is a staggering €3.1 billion ($4.2 billion), which is a big pile of cash.

As crazy a number as $4.2 billion sounds, we're guessing it's much cheaper than two or more like-sized, yet completely independent models that are sold regionally. (Ford Focus, anyone?) On the downside, if the product flops in one market, like the Mondeo/Contour fiasco at Ford, GM will need to be flexible enough to adjust quickly.

[Source: GM]

General Motors Europe to Streamline Production of Next-Generation Compact Car

• 3.1 billion Euro total investment in next generation compact cars in Europe
• Assembly planned in Germany, U.K., Sweden and Poland
• Consultation to begin with European and Belgian employee representatives on future production
• Reduction of current Astra production intended at Antwerp, Belgium

Zürich/Antwerp. General Motors Europe today announced its plan to allocate assembly of its next-generation compact-sized cars to four manufacturing plants: Ellesmere Port, U.K.; Bochum, Germany; Trollhättan, Sweden; and Gliwice, Poland.

Production of the new vehicle, due to replace the existing Astra range in early 2010, is expected to involve a 3.1 billion Euro investment and a 30 percent productivity improvement.

There are no plans to allocate compact car production to the Antwerp, Belgium, facility beyond 2010. We are not talking about a plant closure, however, we have to achieve the necessary improvements. No decision has yet been taken on future production but we will work on options for assembly operations at fair volumes together with the European Employee Forum (EEF). GM Europe will continue the process of information and consultation accordingly. GM's Antwerp plant currently employs 4,500 people to produce the 3- and 5-door version, the station wagon and the convertible of the current-generation Opel Astra.

"Product allocations are extraordinarily difficult decisions to take," said Carl-Peter Forster, President of General Motors Europe. "All of our Western European plants have significantly improved over the past few years and are now very close in terms of the various measures of performance, such as cost, productivity and quality. In the end, it is a strategic decision based on a number of factors such as capacity planning, brand and market considerations, as well as ongoing restructuring activities."

Independent from future product allocations, current production at Antwerp is intended to be reduced in 2007, reflecting the normal diminution in demand over the current product's lifecycle. GM Belgium is to begin consultations with employee representatives on staffing at Antwerp, where the elimination of the equivalent of a shift would require 1,400 fewer people.

Mr. Forster said: "I know that today's announcements will be very difficult for our workforce in Antwerp. I want to recognize the contribution and performance of the entire team. We are committed to identifying a socially responsible approach to the intent to reduce the headcount later this summer by the reduction of production volume and to discuss alternatives for a fair transition beyond the end of the decade.

And Forster added: "The automotive business remains very challenging and GM Europe must continue to focus on increasing productivity and efficiency in order to compete effectively. We plan for an annual production of 750,000 units of compact cars in Europe, which is an increase over the 535,000 produced in 2006. Even with an increase, adjusting capacity to meet demand remains a challenge for GM as it is for other automakers worldwide. We would like to start soon the preparation work with our teams in Gliwice, Bochum, Ellesmere Port and Trollhättan for the production of the next generation, which will require reduced assembly time and an increase in productivity of 30 percent."

Of those plants, Bochum currently employs 4,900 people, Ellesmere Port 2,200 people, Trollhättan 2,150 people and Gliwice 2,800 people.

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