Belgium on the block as GM outlines Opel cuts

26th November 2009, Comments 0 comments

A top General Motors executive said Wednesday the future of Opel's Belgian plant was "uncertain" as he outlined plans to cut 9,000 jobs at GM's loss-making European unit, over half of them in Germany.

BERLIN - "Overall, we are going to reduce our capacity by around 20 percent and we expect to reduce the number of people by about 9,000 people," Nick Reilly, interim head of GM Europe, told reporters after briefing German unions.

"We have to create a sustainable, viable business case, business plan for the future of Opel and Vauxhall," he said.

"The competition in this industry is intense and getting fiercer every day and we have to reduce our structural costs so we can make money in a lower market."

GM's preliminary plans, yet to finalised, envisaged between 50 and 60 percent of the cuts falling in Germany, home to 25,000 Opel workers, half the European total, Reilly said.

Germany's four plants were all safe, according to Reilly, but the future of the plant in Antwerp, Belgium, where the firm employs 2,300 people, was "uncertain."

Klaus Franz, head of Opel's German works council, said that GM wanted to cut a total of 8,684 jobs across Europe, including 7,200 in Germany and Belgium, 900 in Spain and 354 in Britain at Vauxhall's Luton plant.

The German cuts included 1,800 at its Bochum plant, 2,500 at Ruesselsheim, 300 at Eisenach and 300 at Kaiserslautern. The Vauxhall facility at Ellesmere Port would be unaffected, as would Gliwice in Poland, Franz said.

Franz called the plans unacceptable.

According to the GM website, the company employs around 7,000 people in Spain, 4,700 in Britain, where Opel cars are sold under the Vauxhall brand, and 3,500 in Poland.

In addition to around 50,000 employees Europe-wide, GM also has 3,400 workers in Sweden at its Saab unit. A planned sale of Saab to Swedish luxury automaker Koenigsegg and its Chinese partner BAIC fell through on Tuesday.

Reilly said Opel needs around 3.3 billion euros (5.0 billion dollars) of funding in the coming two years to fund a restructuring to help it cope with a "very weak" market in 2010 and in order to invest in its operations.

"We are hopeful that we will get support from all of the countries where we have major operations to contribute to that funding need," he said.

"Up until now, we have had a reasonably good response. Not in terms of actual numbers but in terms of willingness from everyone we have spoken to including in Germany," he said.

"We have also said that GM can and will put some money in as well," he added.

German magazine Spiegel said this week that the company had received offers of 400 million euros from Britain and between 300 and 400 million euros from Spain, as well as proposed tax breaks from Poland.

Following talks among top finance ministry officials and GM executives in Brussels on Monday, the European Commission said that nations affected had decided not to make formal commitments before a further meeting on December 4.

Germany came under fire from other European governments for offering 4.5 billion euros in state aid to support GM's original plans to sell Opel to Canada's Magna International and Russian lender Sberbank.

Other countries contended that Berlin was offering the money in order to ensure that Germany would be spared large-scale job cuts or plant closures. European regulators were also scrutinising the aid.

GM has since walked away from the deal, which would have seen it sell a majority stake in the company that it has owned for 80 years.

The u-turn angered Germany, with Chancellor Angela staking considerable political capital in the Magna deal.

Berlin demanded that GM repay its 1.5-billion-euro loan, which it has since done. Merkel said that without the loan Opel would gave gone under.


AFP/Expatica (Dow Jones Newswires contributed to this story)

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