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Germany

Opel Threatens Pay Cuts, Job Losses for German Workers

In addition to the billions in government aid it says its needs, GM's German subsidiary Opel may have to cut up to 3,500 jobs to survive. But governments are skeptical about investing in the troubled company.

Opel and GM logos

Opel and GM have drawn up a rescue plan, but the politicians aren't impressed

General Motors Europe President Carl-Peter Forster told Germany's Bild newspaper that management and workers at Opel would be required to take pay cuts, but that the firm would try to keep redundancies below 3500.

"That is just what we want to avoid," he said, referring to mass lay-offs.

Opel employs some 25,000 people in Germany and also has plants in Belgium, Britain and Spain. The company has said the governments of all the countries with GM factories must offer financial assistance or risk plant closings.

"Loans or direct share holdings totaling 3.3 billion euros ($41.4 billion) are needed by 2014 to save all these sites," Forster told Bild.

But in Germany, at least, the state is very reluctant to get financially involved in the General Motors subsidiary during the ongoing economic and financial crisis.

German Chancellor Angela Merkel said the company would not receive special treatment in its application for rescue funding. Opel's situation is not the same as banks and other financial institutions that Merkel in the past has called too important fail, according to a report in the daily Rheinische Post.

Germany's Economy Ministry ruled Wednesday that only firms with viable development plans that show they can be competitive will benefit from government support in the economic crisis, according to a ministry spokesman.

Little trust in GM

Late-shift workers at an Opel factory

The outlook for Opel workers is dim

General Motors has promised to invest 3 billion euros of its own in Opel. But since the American parent company has itself needed billions of dollars in aid from Washington to stay afloat -- and is asking for more -- German leaders doubt the US company can keep any assurances.

"The question remains of how reliable such pledges are," Deputy Economics Minister Dagmar Woehrl said in the German parliament, the Bundestag, on Wednesday, March 4. "There's no ruling out the danger that GM will file for bankruptcy protection under American law's Chapter 11."

Nor are local governments eager to buy stakes in the German troubled carmaker.

"The state cannot and will not get involved in any holding," North Rhine-Westphalia Economics Minister Christa Thoben said on Wednesday at a meeting of the economics committee of that western Germany state's parliament.

Moreover, some of Opel's competitors are also against what they say would amount to a partial nationalization of the company.

"If we go further, then there is the danger that we will have only one or two independent manufacturers, and the rest will be state or semi-state enterprises," BMW head Norbert Reithofer told the Financial Times newspaper.

The CEO of Volkswagen has also come out against a state bail-out of Opel. So for the time being, at least, local and federal governments in Germany look as though they would prefer to tolerate job losses than to shore up an ailing automotive giant.

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