Conflict at GM's Opel starts to deescalate

Nick Reilly, interim head of General Motor's European business, addresses the media at the headquarters of German carmaker Adam Opel GmbH in Ruesselsheim, December 4, 2009.

RUESSELSHEIM, Germany (Reuters) - General Motors and disgruntled German workers at European arm Opel took a big step toward reconciling differences on Friday as GM scrapped plans to cut nearly 550 jobs at an engineering center.

Speaking to roughly 9,000 employees at Opel's Ruesselsheim headquarters, GM executive and interim Opel chief Nick Reilly said that Detroit wasn't pursuing a short-term policy of slash and burn but instead looked to offer staff a future.

"Management and the works council agree on the goal of making Opel/Vauxhall a successful company once again with greater independence and a more important role within GM," Reilly said.

Opel senior labor leader Klaus Franz told reporters he was willing to find a solution that swaps painful wage losses and job cuts for concessions from GM that could elevate the importance and autonomy of Opel.

"It has a lot to do with the personality of Nick Reilly. He personifies for me New GM," Franz told reporters, adding that he was encouraged by news that GM would no longer look to cut 548 engineering jobs in the development center in Ruesselsheim.

Franz has strong ties to German government officials and was far more visible in Germany than any GM executives during months of negotiations to rescue Opel from GM's brief U.S. bankruptcy.

He has been particularly vehement in his desire to see more local engineering work to develop smaller, more fuel efficient models better tailored to European tastes.

He said he would meet GM's Ed Whitacre, the board chairman who has taken over as interim CEO after GM sacked Fritz Henderson this week, on Monday in Detroit.

Reilly needs labor's support to contribute 265 million euros ($399.4 million) in annual savings and help facilitate his request to European governments for state aid to support GM's 3.3 billion euro Opel restructuring plan.

Reilly was due to meet European Union officials in Brussels later on Friday to discuss the Opel revamp.

GM wants states with Opel plants -- including Germany, Britain, Spain and Belgium -- to help finance the plan.

(Reporting by Alexander Huebner and Christiaan Hetzner)