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Europe

Brussels Pushes European Reply to GM's Call for Aid

The European Commission called on states with General Motors factories to coordinate their response to the US carmaker's crisis. But Germany has expressed reservations about GM's request for European aid.

The EU's Industry Commissioner has called on the European states with General Motors factories to meet to co-ordinate their response to the US GM logo over generic stock market chart and US 100 dollar bills and DOWN arrow, on texture, partial .

GM shares dropped in premarket trading in response to report

The proposal for a mini-European summit from Industry Commissioner Guenter Verheugen came on the same day as GM's auditors voiced "substantial doubt" about the parent company's ability to stay afloat in its annual report.

Verheugen said Thursday, March 5, that he would like to see coordinated, European action on GM's restructuring plans.

"We need a common market not a purely national one," he said. "I would like to know what the various member states with GM sites are thinking of doing."

GM has said it is conducting talks for aid with the governments of all the European countries where it has factories, including Germany. In addition to Opel's activities in Germany, where it has four plants, the company also has production sites in Belgium, Britain, Poland and Spain.

Belgium is particularly concerned that a bilateral deal between Germany and GM could come at the cost of its Opel factory in Antwerp.

The time is not right?

Karl-Theodor zu Guttenberg

Germany's economics minister has reacted cautiously to proposed European talks

But Germany's new Economics Minister Karl-Theodor zu Guttenberg said a European coordination summit would only make sense if GM revealed what exactly it is planning to do with its European factories and operations.

"There are many issues that still have not been clarified," Guttenberg said

The German government, who are still mulling Opel's request for 3.3 billion euros of financial help from European governments, also raised the pressure on Opel's management on Thursday.

Finance Minister Peer Steinbrueck said the restructuring plan submitted by the executives on Monday did not provide an adequate basis for political decisions. Berlin has told Opel that it needs time to carefully examine their business concept.

German Chancellor Angela Merkel has said that Opel would not receive special treatment under the government's industrial rescue plan. Berlin has provided cash and loan guarantees to a number of financial institutions that were deemed too big to be allowed to fail.

Dire warning from union leader

Opel employees walk into a factory

Tens of thousands of GM employees' jobs are threatened in Europe

GM has over 55,000 employees in Europe including 26,000 in Germany. A senior German union official has warned that the collapse of the Opel unit would lead to the loss of around 400,000 jobs across Europe as jobs at companies that supply Opel would also be axed.

Armin Schild, of the metalworkers' union IG Metall, told the daily Berliner Zeitung that the car and the auto supply sector would be equally hard hit.

"The German government must support Opel financially as a matter of urgency," he told the newspaper. "The consequences of a possible bankruptcy would be more expensive than the aid that Opel needs," he added.

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