blackSRi
15th October 2004, 05:56 PM
Hi, I don't think this has been posted on here yet:
http://www.guardian.co.uk/business/story/0,3604,1327991,00.html
David Gow in Brussels
Friday October 15, 2004
The Guardian
General Motors announced plans yesterday to shed 12,000 jobs - a fifth of the workforce - in its heavily loss-making European operations and issued a profits warning for its global business in the face of ferocious competition and pricing pressure.
The overwhelming bulk of the job losses, probably about 10,000, will fall on Germany, which accounts for more than half of GM's manufacturing costs in Europe and where labour costs are twice as high as in Sweden. The Saab plant in Trollhattan, Sweden, will lose 500 jobs.
It is thought likely that GM's British operations, including the Vauxhall plant at Ellesmere Port, Cheshire, employing 3,200 people, will escape relatively lightly. GM has 7,000 workers in the UK, including 2,200 in Luton; the carmaker could cut up to 200 posts.
The plan to save €500m (£345m) a year by 2006 comes after five years of losses, culminating in a $236m (£131m) deficit in Europe in the third quarter alone, and the failure of the three-year, €1bn Project Olympia to staunch these. GM could lose close to $500m in Europe this year, despite raising its market share to 9.6%.
Fritz Henderson, GM Europe's chairman, said: "This is a pretty sober day for us." It is also a savage blow to Germany, where unemployment this winter is expected to top 5 million. Companies are cutting costs as a result of weak consumer demand, increasing working hours, and shifting output overseas to escape Germany's high wages and social security contributions.
Union leaders, who have agreed locally to widespread job cuts at GM's Opel business in previous years, said they were ready to negotiate but blamed the management for the company's problems. Carl-Peter Forster, former Opel chief and now GM Europe president, said: "If you look back three years, nobody would ever have predicted the softness of the European market, especially in Germany."
Acknowledging "tremen dous" price pressure in Europe, where Asian and even French manufacturers are increasing sales and profits, he squarely blamed the German middle classes for failing to spend enough - forcing GM to offer costly discounts and incentives.
But Mr Henderson, a renowned cost-cutter, allayed German fears that the new plan would mean closure of a car plant, notably Rüssel sheim, near Frankfurt, or Bochum, in the Ruhr region, which employs 7,500.
However, GM plans to decide next year where to build its new mid-sized Vectra and the Saab 9-3 later this decade, and there are strong suggestions that either Rüsselsheim or Trollhattan might close, with insiders and analysts pointing to the Swedish plant.
GM's chief executive, Rick Wagoner, announced flat third-quarter global earnings of $440m yesterday, sustained by its financing business.
He cut full-year profits guidance from $7 a share to between $6 and $6.50. The car business lost $130m, compared with a net profit of $34m a year ago, and Mr Wagoner said these figures were "frankly disappointing". He added: "We've got to move more quickly in addressing these challenging, chronic structural-cost issues."
He also attributed blame for for GM's relatively poor profit performance on lower production in North America - where GM is facing substantial healthcare costs - and slower economic growth in China, as well as price deflation in most markets.
Special reports
Car industry in the UK http://www.guardian.co.uk/car/0,7368,430504,00.html
Global recession
http://www.guardian.co.uk/recession/0,7368,461972,00.html
Recent articles
06.09.2001: British cars get thumbs down - http://www.guardian.co.uk/car/story/0,7369,547399,00.html
03.09.2001: Industry pleads for delay over EU car law -
http://www.guardian.co.uk/car/story/0,7369,545827,00.html
10.08.2001: Running on empty
http://www.guardian.co.uk/car/story/0,7369,534743,00.html
08.08.2001: Ford faces £400m loss in UK
http://www.guardian.co.uk/car/story/0,7369,533781,00.html
Pretty serious stuff huh?
http://www.guardian.co.uk/business/story/0,3604,1327991,00.html
David Gow in Brussels
Friday October 15, 2004
The Guardian
General Motors announced plans yesterday to shed 12,000 jobs - a fifth of the workforce - in its heavily loss-making European operations and issued a profits warning for its global business in the face of ferocious competition and pricing pressure.
The overwhelming bulk of the job losses, probably about 10,000, will fall on Germany, which accounts for more than half of GM's manufacturing costs in Europe and where labour costs are twice as high as in Sweden. The Saab plant in Trollhattan, Sweden, will lose 500 jobs.
It is thought likely that GM's British operations, including the Vauxhall plant at Ellesmere Port, Cheshire, employing 3,200 people, will escape relatively lightly. GM has 7,000 workers in the UK, including 2,200 in Luton; the carmaker could cut up to 200 posts.
The plan to save €500m (£345m) a year by 2006 comes after five years of losses, culminating in a $236m (£131m) deficit in Europe in the third quarter alone, and the failure of the three-year, €1bn Project Olympia to staunch these. GM could lose close to $500m in Europe this year, despite raising its market share to 9.6%.
Fritz Henderson, GM Europe's chairman, said: "This is a pretty sober day for us." It is also a savage blow to Germany, where unemployment this winter is expected to top 5 million. Companies are cutting costs as a result of weak consumer demand, increasing working hours, and shifting output overseas to escape Germany's high wages and social security contributions.
Union leaders, who have agreed locally to widespread job cuts at GM's Opel business in previous years, said they were ready to negotiate but blamed the management for the company's problems. Carl-Peter Forster, former Opel chief and now GM Europe president, said: "If you look back three years, nobody would ever have predicted the softness of the European market, especially in Germany."
Acknowledging "tremen dous" price pressure in Europe, where Asian and even French manufacturers are increasing sales and profits, he squarely blamed the German middle classes for failing to spend enough - forcing GM to offer costly discounts and incentives.
But Mr Henderson, a renowned cost-cutter, allayed German fears that the new plan would mean closure of a car plant, notably Rüssel sheim, near Frankfurt, or Bochum, in the Ruhr region, which employs 7,500.
However, GM plans to decide next year where to build its new mid-sized Vectra and the Saab 9-3 later this decade, and there are strong suggestions that either Rüsselsheim or Trollhattan might close, with insiders and analysts pointing to the Swedish plant.
GM's chief executive, Rick Wagoner, announced flat third-quarter global earnings of $440m yesterday, sustained by its financing business.
He cut full-year profits guidance from $7 a share to between $6 and $6.50. The car business lost $130m, compared with a net profit of $34m a year ago, and Mr Wagoner said these figures were "frankly disappointing". He added: "We've got to move more quickly in addressing these challenging, chronic structural-cost issues."
He also attributed blame for for GM's relatively poor profit performance on lower production in North America - where GM is facing substantial healthcare costs - and slower economic growth in China, as well as price deflation in most markets.
Special reports
Car industry in the UK http://www.guardian.co.uk/car/0,7368,430504,00.html
Global recession
http://www.guardian.co.uk/recession/0,7368,461972,00.html
Recent articles
06.09.2001: British cars get thumbs down - http://www.guardian.co.uk/car/story/0,7369,547399,00.html
03.09.2001: Industry pleads for delay over EU car law -
http://www.guardian.co.uk/car/story/0,7369,545827,00.html
10.08.2001: Running on empty
http://www.guardian.co.uk/car/story/0,7369,534743,00.html
08.08.2001: Ford faces £400m loss in UK
http://www.guardian.co.uk/car/story/0,7369,533781,00.html
Pretty serious stuff huh?