How GM is taking on Ford in Spain
Zaragoza, Spain — The monumental, $1.5 billion General Motors auto-assembly plant here has no cafeteria. ``We discovered that Spaniards are willing to have lunch very late,'' explains Angel B. Perversi, works manager at the plant, ``from 3 to 4 in the afternoon.'' The day shift ends at 2:30, and the workers are bused back home, where they eat. ``The second shift has dinner when it arrives home at 11 or 12 at night.''
The no-cafeteria plant points up the diverse customs that confront Detroit's carmakers when they build a plant outside the United States.
The plant was opened in 1982 to give GM a low-priced small car in Europe in its battle with arch-rival Ford. It also gives the automaker entry into the Spanish market, where Ford has been building cars since the mid-1970s.
GM vice-chairman Howard H. Kehrl concedes that while the Zaragoza plant ``is doing mostly what we expected it to do, it isn't the most profitable investment GM has ever made.''
The GM plant is producing 270,000 cars a year with some 5,000 production workers on two shifts. By contrast, the super-efficient GM-Toyota plant in Fremont, Calif., is expected to produce 200,000 cars a year with 2,500 workers.
Thus, with its heavy worker overload, it may be a long time before Zaragoza can make any money for GM -- if ever. The automaker is also saddled with steep interest rates on local money it borrowed to build the plant.
``We have to absorb, with improvements, a lot of the increases in cost,'' Mr. Perversi sighs.
The GM spread is an impressive place, with 8,300 workers and 70 buses to transport them to the plant. Not surprisingly, given the high unemployment rate in Spain, GM received 100,000 job applications in 1979-80, from which 13,000 were chosen before the final weeding out.
Despite the inexperience of most of the Spanish workers, ``productivity is 10 to 12 percent ahead of that in West Germany,'' says Perversi. The average wage for production workers, including benefits, is $5.40 an hour, about half the total pay scale in Japan.
Indeed, the contrast between Zaragoza and Ford's decade-old auto complex in Valencia is striking.
Inside the main lobby is a large picture of the original Henry Ford with an aging horse-drawn plow on the floor, suggesting the inventor's grass-roots beginning and the company's continuing commitment to the land with its tractor division.
GM's plant, on the other hand, is blue-hued and dominant for miles.
A major problem here at Zaragoza is the long supply line from a new GM component plant in Austria that ships engines to Spain. The Austrian plant works well for GM facilities in West Germany and Belgium, but Spain is at the far end of the line.
``The logistics are bad, because it takes five or six days for a train to reach us, costs a lot of money, and we have to tie up money in inventory,'' says Perversi. ``It is a long logistical line,'' concedes E. V. Van Loo, GM's marketing director in Spain.
Until this spring, the only car built here had been the GM Opel Corsa in both 3-door hatchback and 2-door notchback versions. Now both 4- and 5-door Corsas have been phased in, and the Spanish plant is also expected to build the new aerodynamic Opel Kadett.
The Corsa is part of what Kehrl describes as GM's ``beat-Ford program'' -- and, he insists, ``it's working.'' GM finished fifth among the European Big Six carmakers in 1984, and Ford was No. 2. GM, however, is given a good chance of beating Ford in European auto sales this year.
``Spain is one of the most difficult auto markets in Europe,'' asserts Mr. Van Loo. And automakers are positioning themselves for Spain's January 1986 entry into the European Community. ``When that happens,'' Van Loo says, ``some people will have to pull up their socks. The Japanese will come on like a freight train'' -- and the South Koreans after them.
So far Ford sells more cars in Spain than GM. When Ford came into the Spanish market in the mid-1970s, the leader was SEAT, the Spanish government-owned automaker. In the No. 2 spot was Renault. Even Britain's state-owned automaker, BL PLC, the former British Leyland, was on the scene, but it has since pulled out, with many of the BL dealers going to Ford. GM, which has been working in Spain since 1979, has been pulling dealers away from SEAT, Citro"en, and others.