GM's Opel May Shorten Working Hours

Reuters

U.S. automaker General Motors' (NYSE:GM) German unit Opel wants to shorten workers' hours at its main plant in Ruesselsheim in response to weakening demand for cars in Europe.

GM lost $747 million on its European operations last year as a weak economy hit car sales in the region, forcing manufacturers to confront high fixed costs and a capacity overhang that GM has said equates to 10 plants.

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"Due to the deteriorating market situation in Europe, management of Adam Opel AG is negotiating with the works council and (labor union) IG Metall over shortened working hours in Ruesselsheim," the company said in an e-mailed statement on Thursday, confirming an earlier newspaper report.

Opel, whose cars include the Astra and Meriva ranges, said on Thursday that it expected to conclude talks for shortened working hours in Ruesselsheim shortly.

In June, Opel's supervisory board approved a medium-term business plan, which runs through 2016, in a step towards returning to profitability. But real savings in a restructuring will not come until GM negotiates a deal with labor unions to close Opel's plant in Bochum, Germany, after 2016.

Opel has four plants in Germany - in Ruesselsheim, Bochum, Kaiserslautern and Eisenach.

If management and labor representatives agree to shorten working hours for the plant's staff, Opel can apply for subsidies under the German government's short-work programme, called "Kurzarbeit".

The scheme was used by many struggling companies in the 2008-2009 recession, allowing them to preserve jobs by cutting the hours of employees when usage of plants was low and having the government compensate workers for part of their lost wages.

At that height of the global financial crisis, more than 1.4 million workers in Germany received money under the programme.

While recent data shows that figure stood at only about 80,000 in May of this year, several companies have had to seek government subsidies in recent months.

U.S. automaker Ford (NYSE:F) applied for shortened working hours at its German plant in Cologne in April, hit by a slump in demand for cars in southern Europe.

And ThyssenKrupp, Germany biggest steelmaker, said last month it would temporarily curb working hours at its five steel-making facilities in Germany in response to a slowdown in demand.

Opel has not yet filed an application but has requested an urgent appointment with the head of the labor office in Darmstadt to discuss shortened working hours, a spokeswoman for the labor office said on Thursday.

German daily Allgemeine Zeitung Mainz earlier cited company sources as saying Opel was also considering shortened working hours at Kaiserslautern. Opel did not confirm that information.