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NINETY EIGHT REGENCY

Germany, Spain cautious on Opel's bid for state aid

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Germany, Spain cautious on Opel's bid for state aid

Staff

and Wire Reports

Automotive News Europe -- February 10, 2010 06:01 CET

European countries with Opel factories reacted cautiously to the carmaker's request for 2.7 billion euros ($3.7 billion) in loans or loan guarantees to help it cut nearly 8,400 of its 48,000-person work force and reduce capacity by a fifth.

Opel has asked Germany for 1.5 billion euros in state aid to fund 4,000 job cuts in its home country and another 1.2 billion euros from Spain, the UK, Austria and Poland.

German Economy Minister Rainer Bruederle said: "We will carefully examine the documents."

A member of the free-market liberals in Germany, Bruederle has repeatedly called on Opel parent General Motors Co. to fund its subsidiary's operations itself, and not just contribute 600 million euros toward the 3.3 billion euros it says it needs for restructuring.

Opel CEO Nick Reilly told reporters in Frankfurt that not receiving any aid from Germany was more of a hypothetical issue. "We don't anticipate being turned down," he said.

Altogether, Opel expects to book restructuring charges of about 1 billion euros for reducing 8,370 staff headcount across Europe. This includes some 1,300 white-collar jobs but excludes an additional 1,500 in cuts via early retirement plans.

Spain's Industry Minister said planned job cuts of 900 at the Figueruelas plant in Zaragoza were a sacrifice and Spain's position with regard to the restructuring plan was yet to be decided.

"It's a huge sacrifice. We need to sit down with the unions and the local Aragon government to evaluate the proposal and find out all the details, particularly its long-term viability which, logically, is something we need to be concerned about," Miguel Sebastian told a news conference.

Making money by 2012

On Tuesday, Opel announced a five-year plan to bring the company into profit by 2012. The company said the 11 billion euro plan requires 3.3 billion euros to run the company during the restructuring and it will work with European governments to secure 2.7 billion euros in loans or loan guarantees.

Opel said it will press ahead with the closure of its factory in Antwerp, Belgium, a move one union leader called a "declaration of war."

Trade union IG Metall, which represents most German auto workers, immediately condemned Opel's plan on Tuesday, refusing to contribute wage concessions and recommending German state and federal governments decline the aid request.

Talks over contributing 265 million euros in annual labor cost cuts over the next five years have run aground over Opel's decision to close Antwerp, a move GM says is needed amid feeble demand that could stay weak for years.

About 2,380 people would lose their jobs when Antwerp shuts down around the middle of this year.

By comparison, UK plant Ellesmere Port is due to add a third shift in mid-2011 and Reilly reaffirmed his pledge to secure the future of another Opel/Vauxhall plant in Luton, England, even if Renault backs out of a deal to build its Trafic van there in 2013.

His cuts would eventually boost utilization rates for Opel's installed European production base to about 87 percent on a three-shift basis from 59 percent.

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100210/ANE/100209847/1193#ixzz0f97YRZnE

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