GM Europe seeks cash with 300,000 jobs at risk

The carmaker wants £3billion from European governments to keep factories open, with Belgian and German plants most at risk

The European operations of General Motors will run out of cash within weeks unless they get government support, the American carmaker said yesterday, adding that a collapse would put up to 300,000 jobs at risk.

Fritz Henderson, the chief operating officer of GM, said that the division, which includes Opel in Germany and Vauxhall in Britain, would hit liquidity problems early in the second quarter.

“We will try to stay alive, but there is no reassurance that we could stay alive and we would become insolvent then,” he said at the Geneva Motor Show.

GM is looking for €3.3billion (£3billion) from European governments to keep the division going. It has already said that it will partially spin off the European operations but retain a strong link with GM, unlike its decision to cut off its Saab unit in Sweden.

Mr Henderson said yesterday that GM could keep only a minority stake in GM Europe if other investors were prepared to buy the bulk of the business.

Carl-Peter Forster, the head of GM Europe, said that if the unit collapsed there would be a “a massive reduction in employment”. GM Europe employs 50,000 directly and Mr Forster said that up to 250,000 other jobs relied on the company.

GM is in talks with governments in Britain, Germany, Spain and Belgium.

The stricken American carmaker, which lost $30billion (£21billion) last year, began talks with Germany first because Opel, with 25,000 workers, is by far the biggest part of the European operations.

Mr Forster said: “The UK cannot expect the German taxpayer to shoulder all the burden.” He described Ellesmere Port on Merseyside as one of GM’s leaner factories, in a remark signalling that it could escape a wave of cost-cutting if GM Europe survived and pushed through €1.2billion of cost savings.

Mr Forster said that the European operations needed to close three factories, but he noted that unions were pressing for alternatives to this action.

Vauxhall and its sister van plant appear not to be first in the firing line. The most vulnerable factories are thought to be those in Antwerp in Belgium and Bochum and Eisenach in Germany.

GM has said that it is committing €3billion to its European division, but Mr Henderson admitted that this came partly from technology transfer and possibly from consolidating the sales units that it owns.

A Department for Business spokesman said: “The Government is in regular contact with GM and is waiting to see GM Europe’s rescue plan. When the plan is shared with us, we will be able to sit down with GM to discuss how we can best continue to help Vauxhall.”

Meanwhile, Ford insisted that its European operations would remain integral to its global business.

John Fleming, the chief executive of Ford Europe, said that the company was seeking loans from the European Investment Bank but that it would not need support from governments.

Christine Buckley, Industrial Editor
March 4, 2009

Source: The Times

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