General Motors managers and labour officials tried again on Monday to nail down a deal on sweeping cost cuts at the carmaker's loss-making European business in time for approval at a GM board meeting on Tuesday. Despite worker representatives' comments last week that an agreement in principle was ready, negotiators were still working on a package of voluntary redundancies, early retirement and shifts of staff into state-subsidised "transfer companies" to avoid forced lay-offs, people familiar with the talks said.
"The fact is that we have not agreed on the substance of severance packages and transfer companies," said Klaus Franz, head of the works council at the world biggest carmaker's German unit, Adam Opel AG.
"The next hurdle is whether Detroit will decide about the package," he added, toning down upbeat comments from last week. "One of the open questions is how much money this will cost."
One person familiar with the talks said GM Europe (GME) Chairman Fritz Henderson and GME President Carl-Peter Forster had not committed themselves yet to taking the package to GM headquarters in Detroit for its financial blessing.
"The chances are very high that the package will go to Detroit to be approved but we are not there yet," he said, adding that the cost of the package was a potential stumbling block.
GM has not made a profit in Europe since 1999, despite previous cost-cutting drives that reduced capacity by 28 percent.
It said in October it may chop up to 12,000 jobs - roughly a fifth of its European workforce - to reduce fixed costs by 500 million euros ($667.3 million). Most of the cuts target Germany, where car workers are paid more than elsewhere.
HAT IN HAND: GME executives have to be able to convince Detroit that hundreds of millions of euros in fresh restructuring costs will solve the problem once and for all at a time of slack demand and excess capacity that is fuelling intense pricing pressure.
"We have made a lot of progress. We are pleased with how constructive the negotiations have been. The chances of reaching an agreement in the not-too-distant future are good," a spokesman at GM Europe's headquarters in Zurich said.
GM has always stressed that its goal is to lower the break-even point by half a billion euros per year by 2006 and that the number of jobs to go would hinge on hitting that target.
In Germany, thousands of staff could move into transfer companies, where workers can get state-supported retraining for a limited period while looking for another job.
Elsewhere in Europe, GM was working on separate settlements at each location for departing staff. But far fewer staff were affected in those countries than in Germany.
The maker of Opel, Saab and Vauxhall cars employed around 63,000 people at 11 production and assembly plants in Europe at the end of 2003 and produces around 1.9 million vehicles a year. It has 32,000 workers in Germany.
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