Europe moves to avoid bidding war over Opel jobs

European governments vowed not to enter a bidding war over jobs as the car giant General Motors called for huge subsidies.

GM wants governments to pay most of the 3.3 billion euros it needs to embark on a new business plan for Opel and will announce further details later this week.

The firm's European head Nick Reilly was in Brussels on Monday for a meeting with representatives of countries where Opel has plants. GM Europe has around 25,000 employees, around half of whom are in Germany.

Reilly said after the meeting that he had outlined "in broad terms what the restructuring plan would be" but stressed that staff at Opel and its British sister firm Vauxhall would be the first to know the details.

Worries over cash offers

Ministers and European officials were worried that the firm could be influenced by promises of cash from individual governments over where to close plants.

Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift:  Head of GM Europe Nick Reilly met ministers to talk about the firm's plans

But Reilly said that GM would not be swayed by this. He said that a revamped business plan "will not be influenced by any particular government giving particular money."

The visit came after weekend fears of a bidding war to save jobs between EU neighbours.

Britain, Spain and Belgium were reported by the German news magazine Der Spiegel to have made cash offers of more than one billion euros in total, with promises of tax incentives from Poland.

Even with the money now required by Opel, around 10,000 jobs would still be lost under new plans.

Truce on making deals

After Reilly left the meeting, it was agreed that the member states should not make any commitments to the company ahead of fresh collective talks on December 4.

Bildunterschrift: Half of the 25,000 Opel and Vauxhall workers in Europe are in Germany

"There was no discussion about the amount of state aid," said Kris Peeters, head of the regional Flanders government. He added "It is very important that GM knows that Europe will react in a coordinated way and not individually."

Peeters had earlier said Belgium's offer of up to 500 million euros to keep a northern Antwerp factory open was "still on the table."

Reilly told reporters after the meeting that GM needed governments to provide most of the 3.3 billion euros needed. He said it would be "quite difficult" for the company to meet all of the costs because of commitments in the United States and elsewhere.

"We are looking for support of any government that feels willing to be able to provide us some financing support in the medium term," said Reilly.

Talks with unions

Reilly will speak to union representatives in Frankfurt on Tuesday. Workforce leaders say they were hopeful that the necessary funds would be provided for the plan.

"It's of crucial importance to us that there is complete financing until 2014," said Lothar Sorger, deputy labour leader at Opel's Kaiserslautern site in Germany.

The talks come after GM backtracked on plans to sell Opel to a consortium led by car parts firm Magna, involving aid from the German government.

rc/dpa/AFP/AP
Editor: Michael Lawton