Gliwice to become Europe's sole producer of Astra II

by Hilary Davis

200 new jobs will be created at General Motor's Opel plant in Gliwice, said president of General Motors Europe, Michael Burns - who launched production of Astra II at Gliwice on October 3.

Michael Burns confirmed G.M.'s plans to shift production of Astra II cars from plants in Western Europe to the Opel plant in Gliwice, which will become Europe's sole producer of Astra IIs.

In addition to Agila vans, which it currently produces, the Gliwice plant will turn out 2,000 Astra IIs by the end of this year and another 40,000 in 2004.

The Gliwice plant, which is the largest foreign investment in the Katowice special economic zone, currently employs 2,000 people and in 2002 produced 85,000 cars, 95 percent of which were exported to most countries in Europe and even China. About 80 percent will be for export to Eastern and Central Europe, Australia, New Zealand, RSA and South America. Burns predicts that over the next four years, Astra exports from Gliwice will be worth about $840 million.

"The successful introduction of the principles of G.M.'s global production system at this plant and the positive climate for investment here in Gliwice played a key role in the decision to produce Astra II at Opel Polska," says Michael Burns.

What also played a key role was the Offset Program. The program, which arose from the purchase of F-16 planes for the Polish army, has been hailed by many as Poland's 'Contract of the Century,' and without it, says Burns: "the Gliwice investment would not have been possible."

Weapons companies, Lockheed Martin and Raytheon, are funding part of G.M.'s investment in preparing production lines for the plant's second model - 40 percent of the equipment will be brought over from factories in Western Europe, while 60 percent is brand new. Burns was unwilling to reveal the financial details of the offset deal.

It's no secret that G.M. has been struggling to defend its market position over the last few years - following a net loss of $767 million in 2001. A global 'turn-around' program, initiated since then, aims to cut costs, increase revenue and generally address the fact that, as G.M. Europe's vice president for vehicle operations, Tim Lee, puts it: "The suit we were wearing was simply a few sizes too large."

According to Michael Burns, the turn-around programme is beginning to show results: in 2002 losses were reduced to $549 million, while the $68 million loss in the first half of 2003 is "a solid improvement" on losses in the first half of 2002. But, although the last three quarters have seen G.M.E. increasing its market share, the company is still behind its European competitors in both manufacturing and engineering.

"The Gliwice plant is one of G.M. Europe's most up-to-date plants," says Burns. However, he admits that, "It still has some experience to gain."

This is why Gliwice is to produce Astra II and not the newest model, Astra III, he says: "We decided to locate production of Astra III in Western Europe because those plants have more experience."

Nevertheless, Burns confirms that G.M. Europe is already working on plans to introduce production of a new model to Gliwice in the next few years.