Dropping down a gear

“In 1973 it was a very similar situation,” the production manager of GM Belgium tells me while strolling through the company’s plant at the Port of Antwerp. “Then the market started booming again, and the company was flying aeroplanes with banners saying ‘GM is hiring again’.”

The car company will be hoping for a similar turnaround this time, too, especially as it lost the right to call itself the world’s largest auto maker just a couple of weeks ago. Global sales dropped to 8.35 million against Toyota’s 8.97 million. In Europe, GM sales fell 6.5% in 2008, as rising unemployment and falling consumer confidence hurt demand.

The auto maker is also in the midst of restructuring after announcing that it might run out of operating funds by the end of 2008, resulting in emergency loans from the US government. “The entire industry worldwide is impacted by the weak demand,” says Arnaud Goossens, head of Belgian research at ING. “If consumers are spending now, it’s on staples, not on luxurious, big-ticket items.”

Leo Wiels, GM Belgium’s new managing director as of 1 February, has his work cut out for him. He told Flanders Today that his first objective is to bring stability to the Antwerp plant.

GM Belgium has already introduced several changes in the last few months. The company shortened its working week by introducing “economic unemployment” measures, where workers take a day’s leave that is paid at a much lower rate and is partly compensated by the government. The car maker is now working at 80% capacity, after getting rid of the night shift, going from three to two shifts.
Wiels is ready to take further steps as needed. “As a manufacturing plant, we have to act and react fast and with flexibility, in line with demand,” he says. “Our recent change in the shift schedule shows we’re able to do that.”

The latest cuts at GM Belgium come on top of a restructuring started in 2007, which lowered the plant’s capacity from 250,000 Astra cars to 125,000. There were also job losses, with nearly 1,900 employees taking voluntary redundancy between April 2007 and November 2008.

The automotive industry accounted for 6.1% of Belgium’s gross domestic product in 2006, according to the European Automobile Manufacturers’ Association (ACEA). The other major car plants in Belgium are Ford Genk, Volvo Ghent and Audi Brussels.
In Belgium, auto makers ended last year “amid uncertainty and a feeling of crisis, with orders and sales down,” according to the national automobile federation, Febiac. The number of new car registrations fell by 7.8%, and the federation forecasts “a more difficult period” ahead, with 2009 figures probably falling by at least another 10%.
It’s not only the domestic market, though, that is of interest to GM Belgium, since 96% of its output is exported. The European picture for the industry is not looking any brighter. In Europe, new passenger car registrations dropped by 17.8% in December and recorded their biggest decline in 15 years for 2008 as a whole, according to ACEA.

The biggest single export market for GM Belgium is the UK, which accounts for 21%, followed by Germany at 13% and then Russia at 12%. While most of the production stays in Europe, there are also sales to Australia, the US and Canada. This geographic diversity means that all five Astra brands – Opel, Vauxhall, Chevrolet, Holden and Saturn – are made in Antwerp.

The village of GM
The factory may well be down to two shifts, but during those periods it is a hive of activity, with forklifts and electric pallet transporters moving parts from one area to another, assemblers and technicians spinning around work floor on bicycles or scooters, and bells ringing out to indicate a shift change, lunch or time to go back to work. It’s like a mini town, with pedestrian areas, traffic lights and the twice-daily trains that bring parts directly into the plant.

The cars start their lives in the noisy area of the press shop, where music blares and machines make a regular thudding sound as steel sheets are pressed into doors and other parts. Then off they go to the body shop, which includes “welding street”, so called because the car drives onto the line, where robots peer into both sides and weld parts into place. The most colourful area is, of course, the paint shop. (There’s also a paint hospital if a car needs to be resprayed.)

But the plant doesn’t just give birth to new cars, see them grow and send them off to the hospital when needed. There are also “marriages”, the term used in assembly when the body and engine are brought together. Once assembled and given a final check, cars go into storage and then, hopefully before too long, are delivered to local distributors or exported.

Stock levels have been a concern among industry observers. GM Belgium has been focussing on this issue and since October has only been building to customer orders. This means that “stocks are going down fast,” says Van Landeghem, who is responsible for the operational side of the business. GM Belgium has also been running a promotion called “Choose and drive”, which is focused on selling cars in stock.

In its attempt to stimulate demand, the automaker is also offering special prices and financing as well as premiums for exchanging your old car. As is the case with all carmakers in Belgium, it is hoping that last month’s Brussels Motor Show will encourage consumers. “We hope to see the first signs of recovery soon, but this is highly dependent on the return of consumer confidence,” Wiels says.
The Antwerp GM plant launched in 1924 and is this year celebrating its 80th anniversary of its move into the Antwerp port area in 1929. The site’s reception area boasts a 1925 Chevrolet, similar to the one Van Landeghem’s grandfather used to drive to the carpenters to have fitted with wooden parts. At that time, the car plant was located in a former abbey on Fortuinstraat, ideal at the time because it was well-equipped, had large storage spaces and was close to the water.
The plant moved from the abbey to an old velodrome, then to what is now a cinema complex and finally its current location among the maze of companies that make up the Antwerp port area. Each move has gone hand-in-hand with the port’s development and expansion.

Since Van Landeghem started working for GM Belgium in 1975, one of the biggest changes he has seen is the introduction of automation. When robots were first used in 1984, they just did welding work. Today, there are more than 700 robots doing all sorts of tasks, including paint applications, lifting car bodies and installing windows.
It’s not yet clear whether more changes will be needed to overcome the current slowdown. One thing is for sure, though: Van Landeghem will be expecting GM Belgium to overcome this downturn just like it did for his father and his grandfather.

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