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GM's Russia reorganisation sparks fears at Opel

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GM's Russia reorganisation sparks fears at Opel

Fri Mar 12, 2010 3:09pm EST

FRANKFURT, March 12 (Reuters) - Opel workers demanded reassurances that its European brand will not be disadvantaged at the expense of sister brand Chevrolet, after Opel lost responsibility for the Russian region to an Asian arm of General Motors [GM.UL].

GM transferred responsibility for Russia to GM International Operations (GM IO), based in Shanghai, sparking fears that Opel could lose access to a key growth market which almost overtook Germany by size in 2008, before collapsing last year.

Opel labour reps will discuss GM's plans on Monday at a meeting of the Opel steering committee.

"General Motors has not given any thought about what negative effects this decision could have on the negotiations of Opel/Vauxhall with the European governments, since Russia plays a decisive role as a market of the future," unions warned in a flyer to staff obtained by Reuters on Friday.

Opel workers will "demand a convincing plan for the Russian business of Opel/Vauxhall be presented (that entails) no restrictions to the market and a further expansion of the sales activities," works council members wrote.

A spokesman for Opel said the decision was made to consolidate key sales and manufacturing operations in Russia and the Commonwealth of Independent States under one managerial roof. The measure would not be to the detriment of Opel, he added.

Nonetheless German auto workers union IG Metall fears German jobs could be threatened down the line and demanded that GM commit to expanding, rather than limiting, Opel's sales in the Russian market.

Jilted Opel suitor Magna (MGa.TO) had centred its growth plans for the German carmaker around the Russian market, before General Motors chose to retain, rather than sell Opel.

Based in Shanghai, GM IO is considered by German unions to be a proxy for the lower priced Korean-built Chevrolets that had earned higher margins than Opel.

A recent decision to build a small SUV in Korea rather than Antwerp, Belgium, acutely threatens the very future of the Belgian plant. The Korean plant already makes the Opel Antara midsized SUV.


In a separate development, Opel said it reached a deal with unions in Spain over 900 job cuts, a precursor for government aid. The local state of Aragon is expected to provide 200 million euros alone should it approve plans for production in the Zaragoza plant.

Great Britain said on Friday it would provide a 270 million pound loan guarantee to GM, but the U.S. carmaker is still seeking about 1.5 billion euros ($2.07 billion) in state aid from European governments. [iD:nLDE62B1XA]

"Today marks an important step for the future of Opel/Vauxhall," Opel Chief Executive Nick Reilly said in a statement, thanking the British government for its support.

"I am also grateful for the Spanish government's role in moderating the discussions between management and unions resulting in the important agreement reached early this morning," he added.

Negotiations with Germany remain particularly sluggish, with Berlin's economics ministry saying on Friday GM has yet to update its application for government funding ever since Detroit tripled its commitment to fund Opel's operations.



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