Vauxhall/Opel job cuts: Did Germany strike a deal?

It has been revealed that over 11,000 jobs are to be cut across Europe, 1,400 of those are in the UK. These cuts are happening after Magna, the Canadian-based spare parts venture, agreed to take over Opel and Vauxhall from General Motors.

Magna's restructuring of Opel is yet another sign that Europe's auto industry is flagging in the face of the recession, despite the spate of 'cash incentives' offered to consumers to buy new cars.

General Motors had recently agreed to sell a 55 percent stake in its European units to Magna and Russian bank Sberbank, but last week at the Frankfurt Motor Show, Magna's co-chief executive, Siegfried Wolf, told reporters as many as 10,500 jobs would have to go, with 4,000 of the cuts in Germany.

Carl-Peter Forster, who is head of General Motors European division and head of the Opel supervisory board, said: "We always said that we would have to restructure in order to stay competitive in the long term, given the massive crisis in the car industry.

Opel currently employ over 54,000 workers across Europe, with many of them based in Germany and there is concern that the German branches will lose barely 17 percent of their workers, whilst British plants at set to see a 30 percent loss.

It is believed this has come from a German condition that Magna agreed to, upon receiving €4.5 billion in credit guarantees and a bridging loan, to keep all four German plants open. Germany had already provided a short term loan of €1.5 billion.

It is not the first time during the economic downturn that countries have struck up deals with auto firms. Last year, France lent Renault and Peugeot-Citroen €3 billion each, as they plunged into the red. This was to stop Peugeot-Citroen cutting costs by moving production and jobs from France to lower-cost Eastern Europe.

In the UK however, the job cuts are expected to be shared between the plants at Luton and Ellesmere Port. Unsurprisingly, British unions are concerned about the long-term future of Vauxhall's 5,500 UK workers and the two plants. Tony Woodley, joint leader of the Unite union said he had "growing concerns" over Magna's plans for Vauxhall.

He repeated a warning he gave at the TUC Congress in Liverpool last week, saying "at last the truth is out about Magna's intention towards the UK plants at Ellesmere Port and Luton."

However, despite the British unions press deploring the situation, it appears the biggest loser will be Belgium who will see their Antwerp plant completely closed down, with the loss of 2,517 jobs.

Like this article? Get the RSS feed: