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Opel labor boss signals he's ready to make job-cut deal with GM

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Opel labor boss signals he's ready to make job-cut deal with GM

DECEMBER 8, 2009 12:31 CET

FRANKFURT (Reuters) -- Opel labor leader Klaus Franz gave his clearest signal yet that he had dropped opposition to granting 265 million euros ($394 million) in annual wage concessions and would sit down to negotiate a deal with parent General Motors Co.

Speaking after his first meeting with GM Chairman Ed Whitacre, Franz hailed the former AT&T CEO as someone who "thinks outside the box" and who is open to unconventional ideas -- a quality he said he had rarely witnessed in all the times he has been to the GM's U.S. headquarters.

"Whitacre is a completely different type of manager than what you saw at GM in the past. It's refreshing to talk to someone that gained his experience outside of the company," Franz told Reuters after a meeting with Whitacre in Detroit.

"He truly wants our cooperation, he doesn't want any confrontation at all. Just the opposite, he says that only together can we make GM, Opel and Vauxhall successful."

Franz's comments are a stark contrast with two weeks ago, when he said labor would require the presence of its lawyers during negotiations with GM and described management's pledges to grant greater freedom to its European operations as little more than "sweet-sounding arias."

However since then he has struck a more conciliatory tone and he said last Friday he was willing to allow painful wage cuts and job reductions in exchange for concessions from GM that could elevate Opel's importance within the group.

Franz now faces the task of selling to GM's 48,000-person work force, in particular the nearly half that work in Germany, annual wage cuts and other concessions worth a total of 265 million euros.

Franz said he and Whitacre had agreed to remain in contact and called his first impression very encouraging: "How permanent this is, I cannot say."

Seeking a solution

Franz said he acknowledged the need to lower Opel's breakeven point in his meeting with Whitacre, but said the two sides need to find a solution in everyone's best interest that prevents compulsory layoffs and the closure of Opel's Belgian plant in Antwerp.

This would entail using the full range of labor market instruments available, such as Germany's rules for shortened working hours known as Kurzarbeit.

Relations between GM management and Opel labor leaders had been hostile since Whitacre's board junked plans in early November to dispose of a majority of its European brand to auto parts supplier Magna International Inc. as part of a deal heavily backed by the German government.

Stuck with each other, both sides have recently decided to signal their willingness to compromise and a once-icy standoff has begun to thaw -- particularly after last week's shake-up of management that had long fostered a debilitating culture of passing the buck.

Key concessions

GM has proposed cutting some 2,000 fewer jobs across Europe than Magna, ended its attempt to fire hundreds of product engineers at Opel's development center in Ruesselsheim and even removed contentious figure Bob Lutz from the board of Opel.

Whitacre has largely entrusted Nick Reilly to run GM's European operations. Opel's new CEO plans to delegate authority and accountability to his country chiefs.

A German executive responsible for the Chevrolet Volt, Frank Weber, is heading up product planning at GM's European brand and former Opel executive Karl-Friedrich Stracke will take over as global chief engineer for the U.S. carmaker.

Franz, a critic of Detroit's product strategy long typified by gas-guzzling SUVs and pickup trucks, welcomed Stracke's appointment as proof of Europe's engineering expertise and the importance that fuel-efficient cars now play at the group.

"That also shows -- and this point Whitacre emphasised once more -- the direction that General Motors wants to take in the future," the Opel labor leader said.

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