Brussels: General Motor Co.’s Opel unit will cut 8,300 jobs across Europe, including 4,000 in Germany, and close a plant in Antwerp, Belgium, casualties of the “tough reality” of a shrinking European auto market.
Opel head Nick Reilly said Thursday that the Antwerp plant had to go, with the loss of 2,606 jobs, because the company needs to shed 20% of its manufacturing capacity. That’s because far fewer cars are being sold as a result of the recession.
“We have to take a plant out and unfortunately it’s Antwerp,” Reilly said at a press conference in Brussels. “It is the tough reality of the current business environment.”
He said Antwerp would be the only Opel plant in Europe to shut down but warned that none of the company’s German factories would escape “substantial” job cuts.
The company is still in talks with European governments, including Germany, about some €2.7 billion (in state subsidies it wants as part of the €3.3 billion it plans to spend on restructuring. Reilly said GM is already contributing €600 million and may add more.
Berlin angered other European governments last year by offering a multibillion euro (dollar) subsidy package for a potential buyer for Opel that was reportedly linked to promises to save jobs in Germany.
European Union regulators told the German government it could not give the company money to reduce jobs in one location and not another, ordering them to also offer any subsidies to other buyers, or for GM to keep the plant. That forced GM’s hand and it dropped plans to sell Opel.
The Antwerp factory, founded in 1924, has already shrunk from employing 7,000 workers at its peak to around a third of that today. It produces the Astra three-door, convertible and station-wagon versions, almost all of them for delivery outside Belgium.
Reilly said GM had decided to shut down Antwerp by the middle of the year because the cars it makes can also be produced elsewhere and it would be too costly to shut another factory and shift its output to Belgium.
The Belgian government had tried to stave off the Antwerp plant’s closure by earlier this year offering the company up to €500 million ($707 million) to upgrade the facilities.
Reilly said the economic crisis means European car markets will likely sell 1.5 million fewer cars this year than in 2009 and 4 million fewer than in 2007.
“We’re pretty sure it’s not going to go back to the kind of volumes we had in the past,” he said. “We are losing money and we have to do something about it.”
The GM cutbacks were a hard blow for the 2,600 Opel workers in Antwerp and the automotive supply companies that employ 10,000 workers.
“Some cried, some said finally, at least we know what we are up against, what our future is going to be,” Werner Dillen, a spokesman for the Opel Antwerp trade union told Associated Press television.
But the news wasn’t a total surprise as there has been talk of Antwerp closing for several years. Achmed Teghmas, a worker at the plant, said “it has been two, three years that everybody says this plant will shut down.”
Reilly said he expected workers would be “potentially angry for a time” but said he did not anticipate industrial action because they still had cars to build over coming months.
Opel’s trade unions across Europe said in a statement that the company was breaking a commitment to make a small new sport utility vehicle at Antwerp that it will instead make it in South Korea.
Reilly said the economic crisis has forced the company to change its plans and that SUVs are no longer big sellers. Sales of the heavy vehicles have suffered as cash-for-clunkers programs and cash-strapped customers favor more fuel-efficient cars.