Jobs, Plants In Focus as Opel Cuts Loom Under Magna

Moves to save jobs and sites at carmaker Opel when a group led by Canada's Magna International takes control continued on Sunday.

U.S. carmaker General Motors agreed on Thursday to sell a 55 percent stake in its European arm, Opel, to Magna and Russia's Sberbank , finally bowing to Germany's wishes after months of intense talks. Final details are supposed to be worked out by the end of November.

The debate about which countries will suffer most job cuts has put German vows to provide 4.5 billion euros ($6.6 billion) of immediate state aid for the deal under scrutiny across Europe amid fears that workers in Germany may get preferred treatment.

The issue will be debated on Monday in the European Parliament at the request of former Belgian Prime Minister Guy Verhofstadt, now leader of the Liberals who make up the third-largest group in the EU assembly.

EU Competition Commissioner Neelie Kroes and Industry Commissioner Guenter Verheugen will attend.

Magna and its Russian partners had proposed cutting around 10,000 jobs in Europe in a drive to restore the company to profit from 2011. Half of Opel's 50,000 staff work in Germany.

The Frankfurter Allgemeine Sonntagszeitung quoted a Magna spokesman as saying around 10,500 jobs would now go in all, of which 4,500 would be in Germany. Two thirds of the cuts would target assembly-line workers and the rest would be white-collar staff, it said.

Magna would not comment on the report.

Opel chairman Carl-Peter Forster told the Welt am Sonntag weekly that downsizing details still needed to be worked out.

"We tend to ask ourselves now whether we should reduce the size of plants or close more factories," he said.

"In the end we will be able to build around 1.5-1.7 million cars with 40-45,000 staff in Europe. Opel will be better positioned than many rivals after the restructuring."

He said the German plant in Bochum -- often seen as a candidate for closing even though Magna has proposed keeping all four German Opel factories open -- was "absolutely safe".

German magazine Der Spiegel said the European Commission has discovered the Antwerp plant works more efficiently than the Bochum factory in Germany, which would make it hard to justify saving the German plant if Antwerp is closed down.

Questions about state aid and labor leaders' demand for a veto over job cuts pose headaches for Magna and its Russian allies in what has become a politically fraught transaction to build loss-making Opel into a power on global car markets.

Verhofstadt told Reuters he had asked European Commission President Jose Manuel Barroso to ensure the deal did not favor Germany over other countries, such as Belgium and Britain, that also host plants GM plants.

WHO PAYS?

GM's decision to pick Magna over rival RHJ , a Belgian financial investor, was a political boon to Chancellor Angela Merkel ahead of an election on September 27. Merkel had loudly backed Magna's bid and promised state aid to clinch it.

Other countries including Britain, Belgium and Spain are expected to contribute later to the aid, but amounts are not set while they await detail of where plants and jobs will go.

Roland Koch, premier of the German state of Hesse that hosts Opel's main plant and headquarters, told the Frankfurter Allgemeine Sonntagszeitung he expected no problems in Europe.

"I am very confident that the British and Spanish will take part in the financing," he said. "There are no differences at all with other EU countries even though of course everyone has his own interests."

Magna has said it could close the Antwerp plant in Belgium and the Luton factory in Britain if it has no luck in luring new contracts to make use of their capacity.

Opel labor opposes any forced layoffs or plant closures.

Bochum works council head Rainer Einenkel told the Welt am Sonntag paper that Opel workers, set to take a 10 percent stake in the new Opel, would insist on a big say in how things run.

"We are prepared to make a contribution worth more than a billion euros. We are demanding in return a veto right over job cuts, transfer of production or plant closures," he said.

This stance had been agreed with other Opel labor leaders and would be in line with the influence labor has at Germany's Volkswagen , Europe's biggest carmaker, he said.