Jobs reprieve at General Motors

In a rare note of cheer for the European job market, car giant Opel said it would not be cutting jobs as part of an imminent restructuring.

Last week, General Motors, Opel's US parent company, set out plans to return its European operations to profit by shedding thousands of jobs, cutting production by 15% and saving $1.8bn (£1.2bn) by 2003.

The cuts - in the "single-digit thousands", according to the firm - could have been achieved either by closing a plant, or spreading losses piecemeal around its operations.

But Opel has now announced that it has struck a deal with unions which will avoid either operational job losses or a factory closure.

The firm plans to announce further details of its restructuring in September.

Production problems

To achieve a 15% cut in output, the car maker will need to reduce output by between 300,000 and 350,000 vehicles.

GM's profits fell by 74% in the second quarter of 2001 compared with the previous year, hit by losses of $111m from its overseas businesses.

The European business performed worst of all, losing $154m in the second quarter compared with a profit of $166m during the same three months a year earlier.

Although jobs may now be safeguarded at the firm, components suppliers are still likely to be hard hit by the restructuring.

Opel envisages saving $900m on components and other supplies.

The plan to salvage the European operations follows a similar 13% cutback in the core United States operation, where sales have also been weaker than in previous years.