GM ready for Opel/Vauxhall partners in Europe
FRANKFURT/STOCKHOLM (Reuters) - General Motors Corp
will consider working with outside investors as it seeks to cut $1.2 billion costs from its European business with a plan that could involve job cuts and plant closures.
As GM Europe's management prepared to hold talks on partnerships or equity stakes, German Chancellor Angela Merkel said GM's German brand Opel must present a clear plan before Berlin could consider state aid.
The struggling U.S. carmaker said its European business -- which also includes Saab in Sweden and Vauxhall in Britain -- would likely post a profit in 2011 at the earliest after significant negative earnings and cash flow in 2009 and 2010.
The forecasts were in a restructuring plan GM submitted to the U.S. Treasury on Tuesday.
The global credit crisis has prompted banks to curtail lending, leaving even creditworthy businesses and consumers short of finance and weighing on economic growth around the world, severely denting sales of big-tickets items like cars.
GM is talking to labor representatives on how to avoid site closures and lay-offs, it said on Wednesday..
GM also said on Tuesday it was seeking a buyer for loss-making Saab "given the urgency of stemming sizeable outflows," and would cap its financial support by end-2009.
For its Opel business, GM said it was ready for talks on a restructuring aimed at avoiding layoffs and plant closures, and was prepared to consider expressions of interest from third-party investors.
Sweden ruled out owning carmakers or their factories while accusing GM of shirking its responsibility as an owner, adding talks over state aid for Saab lacked a realistic basis.
"We don't know how much money GM is prepared to put into Saab," Swedish Industry Minister Maud Olofsson said.
"They've said they are going to do this for a year, but in order to keep operating it (Saab) for a year they need 8-10 billion crowns ($906 million to $1.13 billion) and they want us to provide 5 billion of that."
Sweden could support Saab through loan guarantees with the European Investment Bank, Joran Hagglund, state secretary at the industry ministry told Reuters.
Sweden said late last year it would provide its vehicle industry with up to 25 billion crowns aid to help it through the crisis, but has not agreed on any Saab backing.
As speculation continued about how many of GM's planned 26,000 job cuts outside the United States would take place in high-wage western Europe, where roughly GM employs around 50,000 workers, outrage erupted among staff.
"Opel makes a profit and we had a profit last year as well. Nobody on the outside knows that, they just always think that since the parent is falling apart that Opel is also bloody rubbish," said Francisco Jimenez, an Opel worker and IG Metall union functionary in Ruesselsheim, Germany.
Opel dealers were keen to participate in a solution, which could mean taking an equity stake. "If we were asked (for help), we would certainly not say no," Paul Ebbinghous, head of Germany's Opel dealer association, told Reuters.
The chief executive of German solar panels maker Solarworld, who surprised markets in November with a shock takeover bid for Opel's German operations, told Reuters on Wednesday he had dropped his interest in the company after GM spurned his offer three months ago. "That is no longer an issue for us. We no longer pursued this after the rejection," Frank Asbeck said.
Labor leaders such as Opel's Klaus Franz have denounced GM's restructuring plan as "disastrous."
GM said the principle issue in Europe was the near-term lack of liquidity, for which it is in talks with German and Swedish governments over state aid for Opel and Saab respectively.
"Reflecting ... significant reductions in structural costs -- including significant manufacturing consolidation and labor cost savings -- GM's operations in Europe are expected to produce positive financial results in 2011-2014," it said.
GM, seeking a further $16.6 billion from Washington after already getting $17.4 billion in loans, is in talks with European labor representatives over the $1.2 billion in cost cuts which could include "several possible closures or spinoffs of manufacturing facilities in high cost locations."
Media reports have cited production sites in Belgium's Antwerp and Bochum in Germany as endangered, along with Saab's plant in Trollhattan.
Belgium said on Wednesday it would seek contact with Germany to clarify the future of GM and the Opel brand in Europe. The prime minister would bring the matter to an informal meeting of EU heads of state on March 1, it said.
(Additional reporting by Reuters reporters; writing by Helen Massy-Beresford; Editing by Dan Lalor)
($1 = 8.712 Swedish crowns)
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