GM Europe in Talks with Union to End One Astra Production Shift; Could Cut 1,000 Jobs in U.K.

General Motors (GM) Europe is looking to end one Opel/Vauxhall Astra production shift in Europe to increase productivity and boost returns on sales from 0.9% to 5%, AFX News has reported, citing Wirtschaftswoche. The German weekly cited GM Europe Chairman Carl-Peter Forster as saying that the company's management is currently in talks with labour representatives over cancelling one production shift at its Bochum (Germany), Antwerp (Belgium) or Ellesmere Port (U.K.) plant.

In separate news, The Times has reported that GM is considering plans to cut nearly 1,000 jobs at the Ellesmere Port plant. Citing anonymous industry sources, the newspaper said that no decision has yet been made but that such an outcome is a possibility as GM is pondering ways to further boost efficiency in Europe. The talks will be difficult given that nearly one-third of the plant's jobs are at stake. 'There is a difficult set of negotiations still going on, and there could be more than one way to achieve the things GM wants', the anonymous sources said.

GM Europe has declined to comment on the status of its talks regarding future production plans for the Opel/Vauxhall Astra. 'GM Europe is constantly in discussions with all interested parties on improving the efficiency of Ellesmere Port and aligning capacity for all other GM plants building the current-generation Astra', a GM spokesperson told The Times. 'In particular, we are working closely with unions and works councils to achieve the best possible solution for all concerned'.

Outlook and Implications

The news follows frequent speculation in European media regarding GM's intentions in Europe after its most recent restructuring plan is completed. In February, GM denied rumours that 1,000 jobs could be cut at one of its European Astra plants. However, the company has admitted that production of the perennially popular model will need to be revised downwards as the model advances into its lifecycle.

Astra sales peaked at around 620,000 units last year but are expected to gradually decline until the introduction of the next-generation variant in 2010. News that GM is looking to cut a shift at one of the model’s production sites will cause concern among workers as GM has repeatedly warned that it can not rule out the closure of a European plant. The loss of a production shift would be taken as an ominous sign by workers at the affected plant. Indeed, competition between the German, Belgian and U.K. plants will be fierce, adding pressure on politicians, particularly in the United Kingdom where sizeable job losses in the automotive industry have led to accusations that the country's labour laws are putting U.K. manufacturing in jeopardy..

The loss of 1,000 jobs at Ellesmere Port would come as another blow to the U.K. auto industry, which is still recovering from the shock caused by Peugeot's recent announcement that it was shutting down its Ryton plant. Tony Woodley, general-secretary of the Transport and General Workers Union (TGWU), reportedly met U.K. Chancellor Gordon Brown last week to discuss the situation at Ellesmere Port, and the pressure will mount following this latest round of rumours. GM employs around 3,500 staff at Ellesmere Port.

The plans to cut Astra production capacity coincide with GM's announcement that it is considering plans to import the lower-medium-segment model to the U.S. market, where it would be badged as a Saturn to target buyers of more compact cars amid rising fuel prices. This could provide GM's European plants with a welcome production boost, but the expected volumes are, however, likely to prove too low to reverse the company's plans to cut capacity. According to an Automobilwoche report, GM is set to export 40,000 Astra models annually to the United States from 2007.