GM to Cut 10,000 Jobs at European Division

With a total workforce in Europe of 50,000 the announcement of the job losses made on Wednesday by GM Vice-President John Smith means that one in five people involved in the production of the Vauxhall brand in Britain, and the Opel brand, predominantly in Germany, will find themselves without work in the near future. If the sale of the 55 percent stake in GM Europe to Canadian auto parts supplier Magna International, whose partner in the deal was the Russian bank Sberbank, had gone through it is thought that 10,000 job losses would also have occurred. However as France 24 reports the German government had seen the acquisition of the majority stake by Magna as the best possible means to protect the futures of the 25,000 workers employed by Opel in Germany. Indeed the administration of Chancellor Angela Merkel had agreed to provide €4.5 billion ($6.6 billion) in state aid to Magna and Sberbank when the deal for them to acquire the stake in GM Europe was first agreed. Instead, says France 24, the German authorities are now expecting GM to repay the €1.5 billion ($2.2 billion) loan it had obtained from banks in Germany. German Economy Minister Rainer Bruederle has spoken of GM's decision to retain control of its European operation as "totally unacceptable". The decision to pull out of the deal with Magna was apparently based on the fact that there has been "an improving business environment for GM over the past few months". Furthermore "the importance of Opel/Vauxhall to GM's global strategy" was noted. According to United Press International, quoting the Wall Street Journal, the new chairman of Detroit-based GM, Edward Whitacre Jr., is looking for a more aggressive and proactive approach from the company and he does not want GM to withdraw from its existing markets. In Britain, where 5,500 people are employed at Vauxhall, the main plants are at Ellesmere Port in the Northwest of England and Luton in the South of England, one reaction to the news of the job losses came from Tony Woodley, joint general secretary of the trade union Unite. The Press Association is reporting Mr Woodley as saying:

I have no doubt that whoever the owner would be there will be major restructuring of GM operations. Inevitably some will go in the UK, but our task is to minimise the number of jobs lost and ensure that those who do go, go voluntarily. It is right that GM should hold onto its UK plants because this country is one of its strongest and most loyal customers. What is absolutely certain is that GM will need repayable loans - not state handouts - from four or five EU nations. If our government can hand over billions to help the banks this week then it is surely right they make assistance available now to our car industry which is a real investment in manufacturing jobs and our childrens' futures

The CEO of GM, Fritz Henderson, has reportedly put the cost of the restructuring in Europe at €3 billion ($4.4 billion). Apart from the recent improvement in the fortunes of the global auto industry, GM may see the ability of its European operations to produce smaller, more fuel efficient cars as advantageous if the American market starts to look for more of those types of vehicles.