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Business

GM plans to cut 10,000 jobs at Opel

Text by FRANCE 24

Latest update : 2009-11-04

Struggling US carmaker General Motors delivered a second day of bad news on Wednesday, announcing that it will cut 10,000 jobs at its European division Opel, after the shocking disclosal the day before that it would no longer be selling the brand.

In the latest round of the Opel saga, the vice president of General Motors, John Smith, announced on Wednesday that the US carmaker plans to cut 10,000 jobs at its European division Opel. GM had already stunned the world on Tuesday by deciding it would keep the struggling German brand, after months of talks had ended in plans to sell.

The latest move by General Motors means one job out of five in Europe is going to be slashed in a workforce of 50,000 people. John Smith told European reporters on Wednesday that the company will “very soon” unveil more details.

Earlier on Wednesday, German Economy Minister Rainer Bruederle branded General Motors' U-turn on selling a majority stake in its beleaguered European arm Opel "totally unacceptable".

The US auto giant had given preliminary approval to plans to sell a 55 percent stake in

In the field: "Opel closures would cripple entire regions"

German-based Opel and its British division Vauxhall to Canadian firm Magna and its Russian partner Sberbank.

GM announced late on Tuesday it had made the decision because of "an improving business environment for GM over the past few months, and the importance of Opel/Vauxhall to GM's global strategy."

GM's announcement dealt a strong blow to German Chancellor Angela Merkel who was in Washington for talks with President Barack Obama and made a historic address to the US Congress.

Merkel's government had backed Magna's offer as embodying the best future for 25,000 workers on German territory.

Berlin pledged 4.5 billion euros in state aid to Magna and Sberbank after they struck an initial deal.

In an overnight statement, Germany said that it expects GM to repay a 1.5-billion-euro loan extended by German banks.

‘The most cost-effective solution’

General Motors said its board had decided that holding on to Opel and initiating a restructuring of its European operations would be the most cost-effective solution.

Fritz Henderson, CEO of GM, said the restructuring costs have been estimated at three billion euros, "significantly lower than all bids submitted as part of the investor solicitation."

 Bruederle said Berlin urgently wanted to see GM's restructuring plan, saying the company needed the support of the workers if it wanted its European unit to recover.

"This is unacceptable for the employees eight weeks before Christmas," he said.

The saga has dragged on since February, with the fate of at least 10,500 of GM Europe's workforce of around 50,000 hanging in the balance.

FRANCE 24's business editor Douglas Herbert said that improvements across the US car industry have made GM executives see Opel in a fresh light.

"Sales of new cars are rising again, and GM are looking across the Atlantic and thinking that Opel is actually a pretty good outfit," he said.

"Opel has a lot of the technology to make smaller and more fuel efficient cars that the American market is looking for as it forms a strategy for the future.

"Maybe GM feels that the benefits of keeping it in the long term are better than having it sold off."

Date created : 2009-11-04

  • AUTO INDUSTRY

    GM cancels sale of its European unit Opel

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