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Business

GM to Build Mid-Size Cars in Germany

General Motors, the world's biggest car maker, said Friday it had chosen its German unit Opel over Swedish subsidiary Saab to make its mid-size cars in future. Other German Opel plants were meanwhile saved from closure.

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Opel (right) will also produce Saab cars in Germany

"GM has decided to build specific Opel and Saab models, based on a common platform, at (Opel's main site) Rüsselheim from 2008," GM Europe announced in a statement.

Opelwerk in Rüsselsheim

Opel's Rüsselsheim plant

The auto giant had undertaken an "intensive" analysis of both the Rüsselsheim site just outside Frankfurt and Saab's Trollhättan plant in Sweden over the past few months.

Rüsselsheim has "slight advantage"

The analysis was to determine which site offered the best business model that could meet "GM's production demands in Europe in future," the company said.

The study examined each factory in terms of output capacity, investment, labor costs, efficiency, flexibility, logistics and currency.

And while both sites had come up with convincing arguments, "at the end of the day, it was Rüsselsheim that had a slight advantage," GM Europe chairman Fritz Henderson said.

Opel Herstellung in Rüsselsheim

The Opel Vectra is already being produced in Rüsselsheim

Rüsselsheim had been competing with Saab's Trollhättan plant to build GM's new mid-size cars in Europe, including Opel's Vectra model and Saab's 9.3, aimed as rivals to BMW's 3-series and Mercedes's C-Class.

Saab gets at least a few more years

Nevertheless, GM Europe remained committed to Saab's Trollhättan plant, which had been chosen to build the new Cadillac BLS model, being unveiled at the Geneva Motor Show, from 2006.

In addition, Saab cars would continue to built in Trollhättan "at least until 2010," GM Europe promised.

"We stand by the Saab brand and Sweden as a competitive production site," said GM Europe's number two, Carl-Peter Forster.

The last details of an agreement securing the future of Germany's three Opel auto plants were finalized Thursday evening. General Motors has reportedly agreed to keep its factories open.

Opel stays alive

The future of Germany's Opel factories seems to have been secured as well after GM announced massive restructuring plans last year.

We have reached a tentative agreement," the head of Opel's work council, Klaus Franz, said at the carmaker's headquarters in Rüsselsheim.

Opel General Motors Rüsselsheim

"Yes to Opel Rüsselheim" reads the sign

Employee representatives say Opel executives and the trade union have reached an agreement that keeps the assembly factories in Rüsselsheim, Bochum and Kaiserslautern in business indefinitely.

Key concessions

The future of the Opel factory in Bochum has been hanging in the balance for nearly five months. Behind closed doors, employee representatives and management have been fleshing out a package designed to ensure survival of the automaker and negotiating concessions from employees.

These allegedly include working more flexible schedules, foregoing pay rises and accepting reduced bonuses.

No outright dismissals

GM's German outfit was struggling with excess capacity, slow demand, high raw material prices and a strong euro.

Opel-Arbeiter demonstrieren, Plakat: Opel bleibt Basta!

Opel workers striking last October

In October, it triggered angry strikes when it announced a drastic cost-cutting drive to bring its European operations back into profit, threatening to slash as many as 12,000 of the company's 62,000 positions in Europe by 2006, most of them at Opel, as part of a plan to save €500 million ($631 million) a year.

In the talks that followed, management and workers' representatives agreed to lighten Opel's workforce by 9500 by 2007 and say they can avoid outright dismissals.

4500 workers have already accepted severance pay and another 1500 are expected to follow suit in 2006 and 2007. The remaining 3500 have elected to take early retirement or training in affiliated companies.

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