General Motors, the world's biggest car maker, is to cut up to 12,000 jobs in Europe over the next two years, with 10,000 jobs to be axed in Germany, GM Europe announced on Thursday.
Opel is facing a cloudy future
The job cuts -- around 90 percent of which would be made next year -- were part of GM's plans to cut costs at its loss-making European activities by €500 million ($610 million dollars) by 2006, the car maker said in a statement. The company has a total European workforce of about 60,000.
The drastic measures were necessary to address the negative outlook for the European auto market, where demand for new cars was expected to remain sluggish, competition from other car makers -- both European and Asian -- would likely increase and car prices fall in the coming years, GM Europe said.
Workers at Opel's Rüsselsheim factory
Germany will be hit especially hard by the cuts: German car maker Opel is to axe 10,000 jobs from a total workforce of 33,000 in Germany by 2008, Rainer Einenkel, the deputy worker's council leader at Opel's plant in the western German town of Bochum told reporters. Bochum and another plant in Rüsselsheim will each lose about 4,000 jobs, he added.
According to Einenkel, 3,000 jobs will be cut in Bochum in 2005 despite earlier reports that a job guarantee existed until 2006. Another 1,000 jobs will be cut by 2007.
No immediate plans to shut plants
While GM Europe chief Fritz Henderson said that there were no immediate plans to shut down any plants, as unions and politicians had initially feared, factory closures could not be
ruled out altogether.
Opel's main factory in Rüsselsheim, near Frankfurt, and the site in Bochum in the heavy-industrialized Ruhr region have been seen as the most likely targets for possible closure.
Roland Koch, the Christian Democratic premier of the state of Hesse, where Rüsselsheim is located said he was "deeply concerned" about the job cutting plans and urged GM to issue a guarantee that the Rüsselsheim factory would not be shut down.
"It's now about preventing the worst and limiting the damage,"
Koch (photo) said.
In addition to Opel, GM Europe comprises Vauxhall in Britain and Saab in Sweden. The woes at Opel were the reason why German Economy Minister Wolfgang Clement cancelled a planned meeting Thursday with his French counterpart Nicolas Sarkozy at the last minute.