Up to 7,000 Jobs Threatened at Opel

General Motors (GM) plans to axe a total 12,000 jobs in Europe, or nearly one in five of its 62,000-strong European workforce, with Germany to bear the brunt of the cuts, the Financial Times reported quoting GM sources.

The job cuts are to be announced on Thursday when GM unveils its plans to restructure its loss-making European activities, which alongside Opel include Saab in Sweden and Vauxhall in Britain, the daily Frankfurter Allgemeine Zeitung reported separately.

The German paper also put the number of jobs on the line at 6,000-7,000.

GM's European brands have lost more than €1 billion ($1.23 billion) over the last four years, including several hundred million euros this year, according to the German newspaper Süddeutsche Zeitung.

Two of GM's biggest European factories -- Opel's Rüsselheim plant in the central German state of Hesse and Saab's Trollhättan site in Sweden -- were under threat of closure, according to the Financial Times.

GM executives have been growing increasingly frustrated at regulatory and labor restrictions in Europe. Last month, chief financial officer John Devine warned that the continent's manufacturing future was under threat.

"Western Europe, and Germany in particular, has become a very expensive place to do business," he said.

Government gets involved

German government officials said they are already involved in talks about the crisis. Economics Minister Wolfgang Clement (photo) said federal, state and local officials were trying to help preserve jobs at the plant in Rüsselsheim as well as another one in Bochum in the western state of North Rhine-Westphalia.

But Clement added that company and employee representatives first had to work on reaching a solution. North Rhine-Westphalian Economics Minister Harald Schartau said the state government could help with bureaucratic issues but not with money.

Union leaders said they realized employers had much more power in the matter.

"They can threaten to cut jobs and close plants," Hartwig Oertel, a spokesman for the metalworkers' union IG Metall in Frankfurt told reporters, according to Reuters news service.

That's why workers had to use a different strategy, focusing on the damage to the company's image and brand loyalty a plant closure would have. He added that highly qualified workers in Germany were another reason for Opel to stay there.

While equally concerned about job security in Bochum, that plant's workers' council leader said he didn't expect layoffs to happen until 2006.

"We have job security contracts with management," Ditmar Hahn told Süddeutsche Zeitung, adding that company officials were already preparing a Polish plant to take over production of Opel's Astra line.