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Business

Magna to cut 10,500 jobs at loss-making Opel

Text by NEWS WIRES

Latest update : 2009-09-14

Canadian car parts manufacturer Magna plans to lay off 10,500 Opel workers after concluding the acquisition of a majority stake in General Motors' unprofitable European unit, its co-chief executive Siegfried Wolf has announced.

AFP - The co-head of Canadian auto parts maker Magna said Monday that it planned to cut 10,500 posts at loss-making German car maker Opel once it completes its takeover of the General Motors' unit.
   
Co-chief executive Siegfried Wolf said his group, which agreed last week to buy a majority stake in Opel from General Motors, was sticking with plans to cut jobs at Opel and its sister brand Vauxhall in Britain.
   
He confirmed figures reported over the weekend in the German media but said Magna had not modified its terms since late May, when it first signed a memorandum of understanding with GM on the deal.
   
"Our plans haven't changed since May 31," Wolf told reporters at a press briefing in Frankfurt ahead of the international auto show.
   
Previously, the figure reported was 10,000 job cuts. The Opel business, including Vauxhall, employs some 50,000 workers across Europe.
   
Wolf did not say where the job cuts would be made, a sensitive topic as Germany gears up for national polls on September 27.
   
German Economy Minister Karl-Theodor zu Guttenberg told the Sunday newspaper Bild am Sonntag that he believed the cuts were deeper than those estimated earlier by Magna.
   
GM said last week that it would sell a 55-percent stake in Opel to a consortium comprised of Magna and the state-owned Russian lender Sberbank. GM will retain 35 percent of Opel and employees the rest.
   
Financial details of the deal were not disclosed and GM noted that key details still had to be agreed upon.
   
Wolf stressed Monday that Opel could be made profitable again by 2015 and dismissed allegations that Magna would invest 600 million euros (870 million dollars) of German taxpayers' money in Russia.
   
Germany has extended a bridging loan worth 1.5 billion euros to keep Opel going until the takeover is completed, along with loan guarantees worth another three billion euros to get the new company started.
   
Other European Union countries with Opel plants, such as Britain, Poland and Spain, are worried that Germany's generous aid may mean German jobs take preference and that it could breach European Union rules on state aid.
   
Germany is seeking support from the other countries meanwhile to eventually reduce its own contribution.
   
Opel is expected to struggle in a sluggish global auto industry where in Europe and North America too many cars are being made for too few customers.
   
But the Magna boss stressed that the deal opens the way for Opel to grow in Russia, which hopes to overtake Germany as Europe's biggest car market.
   
- Dow Jones Newswires contributed to this story -

Date created : 2009-09-14

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