GM and workers at its Adam Opel GmbH unit have reached an agreement on a restructuring plan that will see them contribute savings of more than 1 billion euros ($1.25 billion) through 2014 to assure the company's future, Chief Executive Nick Reilly said on Friday.
The company, part of General Motors Co., in turn, will offer its employees job security, guarantee production sites and invest more in the development of new models.
Moreover, Opel workers across Europe will get their share of future profits, said Klaus Franz, who heads the company's powerful workers council.
At a joint press conference in Ruesselsheim, where the company — whose brands include Opel and Vauxhall — is based, Reilly and Franz urged the German government to move swiftly to free up loan guarantees to support the company's turnaround. The company has requested loan guarantees of more than 1 billion euros.
"We're waiting for their answer for quite a long time," Reilly said, adding he hoped for some decision by May or June at the latest.
Franz said any such guarantees would not be a bailout or a gift without strings.
"We will pay the money back," he said.
Reilly reiterated that its previously announced restructuring would go forward, including the cutting of capacity by 20 percent and eliminating 8,000 jobs, nearly half of them in Germany. Once the restructuring is complete, Opel would not eliminate any more jobs until 2014.
Opel and its sister Vauxhall employ some 48,000 people in Europe, more than 24,000 of them in Germany.
Opel's plant in Antwerp, Belgium is slated for closure but Franz said there 17 separate bidders have expressed interest in acquiring the facility, which accounts for some 2,600 jobs.
The annual cost savings of 265 million euros shouldered by the workers — who delay pay raises and relinquish half of their holiday and Christmas supplements for the coming years — will be managed by a trustee and have to be invested in the development of the new models, Franz said.
"European employees are investing more then 1 billion euros in Opel's future," Franz said. However, should the money not be invested as agreed, the company would have to pay it back, he added. "I hope we will never face that situation."
Reilly lauded the agreement as a "major milestone" for the company's future, giving Opel "a common base for profitable growth." Full details of the plan will be worked through September.
Opel will also change its legal status, becoming a listed company named Adam Opel AG. "This guarantees transparency and a high degree of autonomy within General Motors," Franz said.
The framework agreement still has to be ratified by local worker councils before taking effect.
Last year General Motors Co. abandoned plans to sell Opel to investors and kept it instead. GM has roared back from bankruptcy to a quarterly profit in less than a year, posting a net income of $865 million for the first quarter 2010.
It announced in March that it would triple its funding for the turnaround of Opel and Vauxhall to 1.9 billion euros.
"It's more than 50 percent of what we need," Reilly said.
GM also applied for state aid of some 2.7 billion euros from European governments in loans and loan guarantees. Germany, however, is reluctant to put up loan guarantees particularly as it ponies up billions of euros to bailout Greece and because GM is profitable again.
But Reilly dismissed the idea that GM could shoulder the turnaround on its own.
"You need to remember that GM is first of all founded by U.S. taxpayers," he said. Pointing to the challenges still lying ahead of GM to stage a full recovery, he added: "Frankly, GM needs the money it has got."
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