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GM's Opel revival plan: Fewer jobs, more new cars

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GM's Opel revival plan: Fewer jobs, more new cars

Paul McVeigh

Automotive News -- February 15, 2010 - 12:01 am ET

MUNICH -- Having decided to hold on to Adam Opel AG, General Motors Co. is pushing an aggressive plan to make the company profitable by 2012.

Opel CEO Nick Reilly last week said GM will:

-- Cut 8,300 jobs as part of a five-year plan that aims to reduce capacity by a fifth.

-- Refresh 80 percent of its product lineup by 2012.

-- Ask European governments for loans or loan guarantees totaling 2.7 billion euros ($3.70 billion).

Reilly said the total plan will cost $15 billion and will require $4.53 billion to run the company during the restructuring. GM will seek loans from governments where Opel and Vauxhall, its British sister brand, have operations.

That part of the plan drew a cool initial response from the governments of Germany and Spain. Opel has asked Germany for $2.06 billion in aid to fund 4,000 job cuts in Opel's home country and has requested a total of $1.64 billion from Spain, the United Kingdom, Austria and Poland.

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

Germany: Let GM pay

A member of the free-market liberals in Germany, Bruederle repeatedly has called on GM to fund its subsidiary's operations itself and not just contribute $823 million toward the restructuring.

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.

All together, Opel expects to book restructuring charges of about $1.37 billion for reducing its head count by 8,370 across Europe. This includes about 1,300 white-collar jobs but excludes 1,500 workers shed through early retirements.

Spain's industry minister said planned job cuts of 900 at the plant in Zaragoza were a sacrifice and said Spain's position on the restructuring plan hadn't been decided.

The minister, Miguel Sebastian, told a news conference: "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."

As part of its plan to reduce capacity to match weaker demand for new cars, Opel will press ahead with the closure of its Antwerp, Belgium, factory.

Opel gets Volt sibling

The company said the plan includes a strategic push into alternative propulsion technology that will see the launch of an extended-range electric vehicle in addition to the Opel Ampera, a sibling to the Chevrolet Volt plug-in hybrid.

The GM Europe CEO said the external auditors Warth & Klein have said the carmaker's plan is viable. Based on that assessment, Reilly said, the company has now formally applied for loans or loan guarantees from the German government. Germany is home to half of Opel's 48,000 workers.

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

Talks over contributing $363.5 million 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, the plant in Ellesmere Port, England, is scheduled to add a third shift in mid-2011. 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.

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

Reuters contributed to this report

WHERE OPEL'S AX WILL FALL

Opel/Vauxhall will cut 8,300 jobs in Europe and reduce production capacity 20% in a bid to become profitable by 2012. Here are where the cuts will fall.

JOB CUTS IN MANUFACTURING PLANTS

• Antwerp, Belgium: Will be closed, with Astra HB3 production moved to Bochum, Germany; 2,377 jobs to go.

• Bochum: Exclusive production of new Zafira in three shifts; F13 transmission production closed, replaced by F17 from Aspern; 1,799 jobs to go.

• Zaragoza, Spain: To keep current two-line system, may get new Combo and other Corsa derivatives; 900 jobs to go.

• Ruesselsheim, Germany: Will build Insignia, add new Astra HB5 flex in 2011, relocate F40 transmission production to another plant; 862 jobs to go.

• Luton, England: Will maintain output until 2013; new business opportunities will be sought; 369 jobs to go.

• Eisenach, Germany: Will build all HB3 from current Corsa, 3 shifts with new Corsa: 300 jobs to go.

• Kaiserslautern, Germany: L850 engine production stopped in 2011, will keep current diesel engine for its life cycle; 300 jobs to go.

• Ellesmere Port, England: Will build Astra HB5 and SW, add 3rd shift in mid-2011; no job losses

• Gliwice, Poland: Will build NG Astra HB5, NB4, HB3, add 3rd shift in mid-2010; no job losses

• Aspern, Austria: Will keep output of gearboxes, engines; no job losses.

• Szentgotthard, Hungary: Will build gasoline engines, transmissions; no job losses.

TOTAL REDUCTIONS: 6,907

JOB CUTS IN SALES AND ADMINISTRATION

• Germany: 650

• United Kingdom: 150

• Belgium: 110

• Switzerland (GM Europe headquarters): 80

• France: 50

• Hungary: 40

• Italy: 40

• Poland: 40

• Russia: 40

• Netherlands: 20

• Sweden: 10

• Portugal: 10

• Switzerland national sales company: 10

• Others: 50

TOTAL REDUCTIONS: 1,300

Read more: http://www.autonews.com/article/20100215/RETAIL03/302159951/1128#ixzz0fcCu0260

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