GM to axe 10,000 jobs as workers stage protest

Workers at Opel in Germany are expected to go on strike today after General Motors (GM) announced it will cut 10,000 jobs following the US carmaker's shock decision to halt the sale of its European division.

GM said on Tuesday that it was cancelling its deal to sell Opel and Vauxhall to Magna, the Canadian car parts maker, and Sberbank, its Russian partner, following months of negotiations.

Germany’s powerful workers’ union, IG Metall, said yesterday that workers at Opel’s four German plants would hold warning strikes today to protest GM’s decision. European-wide strikes are planned for tomorrow and Monday, it said. GM's European business employs a total of 54,000 workers.

GM's tally of planned job cuts is below the 10,500 redundancies Magna said it would make once it took control of Vauxhall and Opel, including 4,000 cuts in Germany.

However, there are fears the axe will now fall more heavily on the German operations, which employs 25,000 staff, and GM may choose to close two of its four factories.

In contrast, the 4,500 workers at Vauxhall, GM’s British business, are expected to avoid compulsory redundancies. Tony Woodley, joint secretary of the Unite union, said that while some redundancies were likely in the UK, he had no reason to believe they would be compulsory.

Angela Merkel, the German Chancellor, had been heavily lobbying Magna and Sberbank to buy GM's European business and had provided a €1.5 billion bridging loan to ensure the survival of the operation.

Germany, which yesterday branded GM's U-turn as "totally unacceptable", is now demanding the return of the bridging loan.

Lord Mandelson, the Business Secretary, restarted talks with GM’s chief executive yesterday, indicating that the Government would offer loan guarantees that in effect underwrite its plans in the UK.

Klaus Franz, Opel's top employee representative, called it a "black day" and said that GM could not expect any help on its restructuring plans.

"We won't help shape the way back to General Motors. Instead we will take up our classic function of defending the workers," he said.

John Smith, GM's vice-president for corporate planning, said that a new group plan would be put before European governments "very shortly‚" but added that it would be similar to Magna plans.

At Vauxhall, Unite last month reached a deal with Magna to limit any UK cuts to 600, and all through voluntary redundancies.

Unite will now have to seek a fresh agreement with GM. German trade unions now fear two of the four Opel factories could close.

Explaining its decision, GM said that Europe's business environment and its overall health had both improved since it put the division up for sale and that a restructuring plan was now the better option.

(Published by Times Online - November 5, 2009)