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NINETY EIGHT REGENCY

Opel labor to start restructuring talks next week Union must agree to cuts for Magna-Opel deal to close

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Opel labor to start restructuring talks next week

Union must agree to cuts for Magna-Opel deal to close

SEPTEMBER 18, 2009 - 10:16 AM ET

FRANKFURT (Reuters) -- First talks between European unions and delegates from General Motors Co. and Magna International Inc. begin next week over plans to cut 10,500 jobs at Opel to reduce labor costs by hundreds of millions of euros.

"In the coming week, works councils and trade unions will begin the negotiations over the future of the European sites and our jobs," a flyer distributed to German Opel workers on Friday said.

Two people familiar with the situation told Reuters that an initial round of informal talks would begin on Monday. Each country home to an Opel plant is expected to send one worker representative to Opel headquarters in Ruesselsheim, near Frankfurt, to meet with negotiating partners from GM and Magna.

One of the remaining conditions for GM to sign a deal to sell a 55 percent stake in Opel to the Canadian auto parts supplier and its Russian partner, Sberbank, is a pledge by labor to contribute to annual cost savings worth about 265 million euros ($390 million) for several years.

Local labor leaders at Opel's eight western European car and powertrain plants are all concerned how much volume they each might have to relinquish to benefit another site.

The biggest job losses are expected to be in Antwerp, Belgium, and Bochum, Germany, which could lose production of the Astra compact and stop making transmissions.

Plant closure fear

Opel's Belgian plant is in danger of being closed entirely now that GM looks like it wants to build two subcompact crossovers in China instead of Antwerp. The production was promised to Antwerp a couple of years ago as a concession to it losing the contract for the Astra compact.

"We looked at it in detail but it just didn't make sense based on our own internal analysis," GM CEO Fritz Henderson said on Wednesday during the Frankfurt auto show.

Efficiency metrics like the cost per vehicle did not show that Antwerp was better than Bochum, he had said, refuting speculation the EU might block the Magna deal because closing the Belgian site when Bochum was less productive was against internal market rules.

"Bochum's production is 200 euros per car cheaper than in Antwerp," Bochum labor leader Rainer Einenkel said on Friday.

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Here's an interesting question: If the unions fear long term job losses in favour of Russian workers, how will they vote?

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