Magna expects to cut 10,500 Opel jobs, Wolf says

[davidlane]

And the "drama" continues



FRANKFURT/BRUSSELS (Reuters) -- Magna International Inc. will cut about 10,500 Opel jobs in Europe, the bulk in Germany, as it acts to return the carmaker to profit and pay back 4.5 billion euros ($6.55 billion) in state aid, its co-chief executive said.

The Canadian auto parts supplier aims to sign a deal with former Opel parent General Motors within two weeks to buy a 55 percent stake together with Russian partner Sberbank, Siegfried Wolf said on Monday.

"By 2015 we want to pay back the government-guaranteed loans. Opel will be profitable before that, however," Wolf told a news conference.

Around 4,000 jobs in Germany will have to go for Opel to reach profitability, and Wolf said there was a risk an Opel plant in Antwerp may be closed.

He foresaw investing nearly 1 billion euros a year in Opel. Around 170 million euros of the funds it has earmarked would go to finish planned investment in Russia, he said, slamming an Opel trustee for saying 600 million in investments in Russia would come from state aid it gets.

"The 170 million would be used immediately, with the rest of the sum being generated from the internal cash flow that will be generated in Russia," he explained.

The Magna co-CEO dismissed talk that car parts customers like Volkswagen AG could pull contracts from Magna now that it was buying a rival carmaker.

Scrutiny of aid pledge

Britain and Belgium urged the European Commission to ensure the takeover of Opel did not favor German workers because of 4.5 billion euros in promised aid from Germany.

Both are wary of the deal with Magna and its Russian allies, under which all four German plants stay open while Antwerp and one of two Vauxhall sites in Britain could close.

"It is important to say that the (European) Commission should not accept anything that looks like a political fix or any linkage between aid and retention of jobs in any specific plant or country," British Business Secretary Peter Mandelson told BBC radio.

Germany hopes Magna's expertise will preserve as many jobs as possible in Germany where Opel employs 25,000 people, half its workforce.

Kris Peeters, premier of the Belgian region of Flanders that is home to the Antwerp plant, said he and EU Industry Commissioner Guenter Verheugen had agreed that commercial and economic, not political, factors were paramount in deciding which plants should survive.

"We are convinced Antwerp has a fair chance. Antwerp has a better chance than certain German plants," he told reporters.

Verheugen and Competition Commissioner Neelie Kroes were also due to address a European Parliament debate on Opel aid called by former Belgian Prime Minister Guy Verhofstadt.

Another former Belgian prime minister and now foreign minister Yves Leterme engaged European counterparts on the Opel issue on Sunday.

Aid from Germany

The Commission said it expected to receive details on aid from Germany in the next couple of weeks and said no subsidies could be given before it was satisfied they complied with state aid and internal market rules.

Chancellor Angela Merkel's government, worried about potential job losses before an election on Sept. 27, had openly backed Magna over financial investor RHJ.

http://www.autonews.com/article/2009...309149887/1308

[SaabKing]

I thought the magna deal was the best for the German worker. Looks like they got the shaft too, all so Mother Merkle could get her hands on Russian oil. This will not go well with the German people. GM should have bankrupted their euro operations and did what they are doing stateside, that would have been a win win for all.

[davidlane]

Originally Posted by SaabKing

I thought the magna deal was the best for the German worker. Looks like they got the shaft too, all so Mother Merkle could get her hands on Russian oil. This will not go well with the German people. GM should have bankrupted their euro operations and did what they are doing stateside, that would have been a win win for all.

That would have been a doable deal only if the German "government" was as foolish, IMO, as the US "government." They didn't spend/commit anywhere near the amount for stimulus and are seemingly recovering quicker. Maybe they were correct.

[civilzues]

Originally Posted by davidlane

That would have been a doable deal only if the German "government" was as foolish, IMO, as the US "government." They didn't spend/commit anywhere near the amount for stimulus and are seemingly recovering quicker. Maybe they were correct.

ehh, not really. they were not 'hurt' as much as the US.

[davidlane]

Originally Posted by civilzues

ehh, not really. they were not 'hurt' as much as the US.

One set of unemployment numbers I found shows 7.296% for '08 another shows 9.0%. In,either case their unemployment numbers have been higher than ours for several years. In that respect maybe they weren't "hurt" as badly as the US. However they have been "hurting" more and longer if you believe their unemployment numbers.

[zete]

So, Magna is supposedly proposing exactly what GM said was necessary to fix Opel: cut jobs and capacity? Including the shutting down of Antwerp.

I wonder how this will play out in the la-la land that is the German government. Is it OK now that a nice, kind-hearted Canadian is doing the deed instead of an American?

[rueben44]

Good for them I hope they lay them all off to punish them for what they German gov. did to GM.

[stormwatcher]

Originally Posted by SaabKing

I thought the magna deal was the best for the German worker. Looks like they got the shaft too, all so Mother Merkle could get her hands on Russian oil. This will not go well with the German people.

People knew all along there were going to be job losses.

Originally Posted by SaabKing

GM should have bankrupted their euro operations and did what they are doing stateside, that would have been a win win for all.

That's nonsense. If GM had bankrupted Opel, GM would likely have ended up with nothing, just like GM North American shareholders here ended up with nothing. If there's some "win win" there, please point it out to us.

[Dr. Show-Me]

The total number of American job losses if auto production in the US had collapsed, which could have happened, would have been 3 million, on top of the 16 million already without work. It could have pushed us into a "recognized" depression, instead of the "Great Recession" they are calling it.
Opel isn't anywhere near as big, and its loss would have had less effect.
One thing remains - there is excess auto production capacity that must be dealt with, by plant closings, layoffs and maybe even more brands going away. It's Germany's turn to shut down over-production.

[mbukukanyau]

So, how does IP game play out and where does that put GM in 2015 vs Opel and GM's Europes position. Anyone wants to bring me up to speed?

[Rocket 88]

Considering Der Reich pushed GM into selling most of Opel and specifically to Magna, I have no sympathy at all.

[jcgable]

I feel for the workers, but that is really really funny. 10,500 jobs! That is well more than double their projections. What's even funnier is that they came to that realization just days after GM's board approved the deal.

[rsbaker]

10,500 jobs gone and they can't blame GM. Angela Merkel now has to take her lumps in the election. She was pushing Magna because she said they were going to save German Jobs. GM can now use the money they made on the sale to build up Chevrolet Europe.

[Tstag]

Cue Fiat counter offer to the Germans?

[seeg]

Originally Posted by rsbaker

10,500 jobs gone and they can't blame GM. Angela Merkel now has to take her lumps in the election. She was pushing Magna because she said they were going to save German Jobs. GM can now use the money they made on the sale to build up Chevrolet Europe.

It's gonna take waaaaaaaaaaay more money than that...