Opel management, labour sign restructuring deal

ERJ staff report (Reuters)

FRANKFURT (Reuters) - General Motors Co.'s European Opel-Vauxhall unit signed a restructuring deal today aimed at saving 265 million euros ($325 million) in annual wage costs through 2014, Opel labour leader Klaus Franz said.

After drafting a master agreement on May 21, European union and workforce representatives from countries hosting Opel's major manufacturing plants signed the deal with Opel CEO Nick Reilly.

Franz said the signatures meant neither side can now withdraw from the contract, eliminating concerns that it might only be valid if Germany agrees to more than 1 billion euros ($1.23 billion) in loan guarantees.

"In the unlikely event that Germany doesn't grant state aid, we can no longer be extorted," Franz said, adding that the final binding agreement included all the conditions and terms agreed earlier this month.

Spokespeople for Opel could not immediately be reached for comment.

All parties to the deal signed, except for representatives from the Opel plant in Bochum, Germany, Franz said. He said he expected them to sign soon.

Earlier today, business advisers to Germany's rescue fund met in Berlin to discuss whether to recommend extending loan guarantees to Opel, but the result of the talks was unknown.

GM has requested state aid from European governments to help fund a 3.7 billion euro ($4.55 billion) turnaround plan at Opel that would shrink its production and labour capacity by about 20 percent.

Germany skeptical on aid to GM

GM's own return to the black has provided opponents within Germany plenty of ammunition to argue against aid to Opel .

The advisers to the rescue fund are mainly former captains of German industry, such as ex-Schering CEO Hubertus Erlen and industry lobby group BDI's former head, Michael Rogowski.

Even if the advisers agreed today on a recommendation, the decision ultimately remains a political one. German Economics Minister Rainer Bruederle has indicated more time will pass before the issue can finally be settled.

"In the end, the decision lies with the Economics Ministry," Bruederle told reporters today in Brussels. He reiterated his skepticism about giving aid to Opel despite the repeated calls from four German states which host plants.

From Automotive News (A Crain publication)