General Motors has announced that 12 000, or one in five, of its European employees will be released by the end of 2006 in a drastic cost-cutting exercise.

General Motors has announced that 12 000, or one in five, of its European employees will be released by the end of 2006 in a drastic cost-cutting exercise.

The multinational’s German operations will be the worst hit, with 10 000 axings - about a third of Opel’s local workforce - expected. The company expects to save about R3,27 billion per year.

The Bochum and Russelsheim plants will lose 4 000 workers each, while 500 will be made redundant at Saab’s Trollhattan plant in Sweden. But while no plant closures have been included in the announcement, two of the biggest factories, Russelsheim and Trollhattan, remain under threat. Their survival is largely dependant on which plant gets the deal to produce the next Opel Vectra and Saab 9-3.

The Russelsheim job cuts will affect production as well as research and development staff. German unions fear that the production of the Opel Astra station wagon could be moved to Belgium or English plants, while the Zafira MPV’s production could be shifted to Poland.

GM Europe chairman Fritz Henderson noted that ‘the lack of industry growth, the pricing environment and the competitiveness of the market do not allow us to grow fast enough to offset the cost base we have today.

“We have no choice than to take tough steps to ensure our long-term success,” Henderson added.

Meanwhile, GMSA communications manager Denise van Huyssteen reiterated that local operations would remain unaffected by the European situation.

"A company spokesman confirmed that the job cuts announced by General Motors yesterday (Thursday) would be restricted to its European operations."