Russia's GAZ to cut 5,800 jobs as Opel deal looms

MOSCOW, July 1 (Reuters) - Russian car maker GAZ Group (GAZA.RTS), a partner in the consortium set to acquire control of Germany's Opel, will lay off 5,800 workers as of August 1 as it struggles with a deep slump in demand. "Before now we had been able to avoid mass lay-offs," a company spokeswoman said on Wednesday, explaining that the firm's production is now a third of what it was before the global financial crisis hit Russia last autumn, making many workers redundant.

GAZ Group, controlled by indebted metals tycoon Oleg Deripaska, has been named as an industrial partner in the deal to have Russia's Sberbank (SBER03.MM) and Canada's Magna (MGa.TO) buy control of Opel from its bankrupt U.S. parent company, General Motors GMGMQ.PK.

Facing a 60 percent drop in sales this year and tough talk to restructure its debt, GAZ has until now been able to avoid serious job cuts with the help of emergency loans from state-run banks. [ID:nLU451313]

It has, however, fired 1,200 personnel working on the production of its unpopular Volga sedan.

GAZ deputy chairwoman Yelena Matveyeva said in separate comments on Wednesday that her company is eager to take on Opel's production, as it would likely do if Sberbank and Magna seal a final deal to buy the European car maker.

"As of today, GAZ Group is the best prepared in terms of technology to take on their (Opel's) production," she said. "We have specialists that have been certified by them, by Opel."

But the financial times reported on Tuesday that Belgium-based RHJ International (RHJI.BR) could sign a memorandum of understanding for an Opel deal this week that might allow GM to scrap the previous deal. [ID:nLU10757]

This would sever an important lifeline for GAZ, which needs to bring its technological base up to European standards if it is finally to produce a car that can compete on the global stage.

Asked if the Russian-Canadian consortium was really in danger of being outbid by RHJ, Matveyeva said: "We are on the sidelines of this process. You would have to ask the leaders of the consortium about their position." (Reporting by Anton Doroshev, writing by Simon Shuster; editing by Mike Nesbit)