GM to cut jobs in Europe

Associated Press

Wednesday, August 15, 2001

BERLIN - General Motors Corp.'s ailing European operation will shed thousands of jobs and may close one of its 13 car plants in an attempt to break out of a ``downward spiral'' and return to profit by 2003, its German Opel unit said Wednesday.

Outlining a plan to save more than $1.8 billion (2 billion euros) a year, Adam Opel AG chief executive Carl-Peter Forster said production capacity would be cut by 15 percent, or as much as 350,000 vehicles, and suppliers will be asked to trim prices by $900 million.

He said thousands of jobs would be cut in assembly alone and indicated more reductions in office and sales staff. But he declined to forecast the total number of layoffs among the 75,000-strong work force, saying the plan would only be finalized at the end of September.

To streamline its sales network, Opel said it will close up to 30 percent of its 2,000 dealerships in Germany.

Component factories and other peripheral business are to be sold or folded into joint ventures with outside suppliers.

``We were in a downward spiral that had to be broken,'' Forster told a news conference, adding that GM Europe, which includes Britain's Vauxhall, also needs to ``extend and sharpen'' its vehicle range.

He said the program would cost the maker of Vectra and Corsa sedans $900 million, but didn't forecast how much Opel or GM Europe would lose this year.

GM installed Forster in April, charging the former BMW executive with turning around Opel, which has been losing market share for years and criticized by analysts for its staid image compared to rivals such as Volkswagen and Renault.

The German unit is the hub of its European operation - with more than half its sales and a third of its work force - and the center of its losses.

Forster's predecessor, Robert Hendry, resigned in January after Opel booked a record loss of 502 million euros ($460 million) in 2000.

As well as trimming its structures and boosting efficiency in the short term, Forster said Wednesday the company had to get away from its past reliance on discounts to make sales, address customer concerns about quality, and move its brands upmarket.

He promised a flurry of new, innovative designs including sports cars and environmentally friendly models, and said he was confident the company's image won't be dented by the layoffs.

In Germany, Opel's market share has dwindled to 12 percent, having hovered around 17 percent in the mid-1990s. The company has said the decline has bottomed out this year and is already starting to increase.

http://www2.bostonherald.com/business/business/gmcuts08152001.htm

-- Martin Thompson (mthom1927@aol.com), August 15, 2001