Millions in German Opel aid bound for Russia, says report

FRANKFURT (Reuters) - Hundreds of millions of euros in German state aid planned for carmaker Opel is earmarked for operations in Russia, an Opel trustee with reservations about the project was quoted as saying in a newspaper interview.

“More than 600 million euros ($876 million) of the 4.5 billion (in German aid) is supposed to be used to modernize the Russian automotive industry according to the Magna plan,” Dirk Pfeil told the Frankfurt Allgemeine Zeiting in an interview, part of which was released ahead of publication on Monday.

“That means German expertise will soon be transferred to Russia and jobs will be cut here later.”

U.S. carmaker General Motors agreed on Thursday to sell a 55 percent stake in European arm Opel to Canadian automotive supplier Magna and Russia’s Sberbank. Carmaker GAZ is an industrial partner.

The Opel Trust -- set up by Germany to oversee a 65 percent stake in Opel and keep it from being sucked into GM’s brief bankruptcy proceedings -- approved the sale when Pfeil abstained in a vote despite misgivings about the transaction.

Magna has declined comment on the accord ahead of a news conference in Frankfurt on Monday. Final details are supposed to be worked out by the end of November.

State aid to Opel is a hot topic amid concerns that German jobs and plants may get preferred treatment over other countries in Europe like Britain and Belgium that also host GM factories.

The issue will be debated on Monday in the European Parliament at the request of former Belgian Prime Minister Guy Verhofstadt, now leader of the Liberals who make up the third-largest group in the EU assembly.

Magna and its Russian partners had proposed cutting around 10,000 jobs in Europe in a drive to restore the company to profit from 2011. Half of Opel’s 50,000 staff work in Germany.

The Frankfurter Allgemeine Sonntagszeitung quoted a Magna spokesman as saying around 10,500 jobs would now go in all, of which 4,500 would be in Germany. Two thirds of the cuts would target assembly-line workers and the rest white-collar staff.

A man walks past the Opel assembly plant in Antwerp September 11, 2009. GM's board opted to sell Magna and its Russian partner Sberbank a 55 percent stake in Opel over a rival offer from Belgium-listed investor RHJ International. REUTERS/Francois Lenoir


Opel chairman Carl-Peter Forster told the Welt am Sonntag weekly that downsizing details still needed to be worked out.

“We tend to ask ourselves now whether we should reduce the size of plants or close more factories,” he said.

“In the end we will be able to build around 1.5-1.7 million cars with 40-45,000 staff in Europe.”

He said the German plant in Bochum -- often seen as a candidate for closing even though Magna has proposed keeping all four German Opel factories open -- was “absolutely safe”.

German magazine Der Spiegel said the European Commission has discovered the Antwerp plant works more efficiently than the Bochum factory in Germany, which would make it hard to justify saving the German plant if Antwerp is closed down.

GM’s decision to pick Magna over rival RHJ, a Belgian financial investor, was a political boon to Chancellor Angela Merkel ahead of an election on September 27. Merkel had loudly backed Magna’s bid and promised state aid to clinch it.

Other countries including Britain, Belgium and Spain are expected to contribute later to the aid, but amounts are not set while they await detail of where plants and jobs will go.

Roland Koch, premier of the German state of Hesse that hosts Opel’s main plant and headquarters, told the Frankfurter Allgemeine Sonntagszeitung he saw no problems looming in Europe.

“I am very confident that the British and Spanish will take part in the financing,” he said. “There are no differences at all with other EU countries even though of course everyone has his own interests.”

Magna has said it could close the Antwerp plant in Belgium and the Luton factory in Britain if it has no luck in luring new contracts to make use of their capacity.

Opel labor opposes any forced layoffs or plant closures.

Bochum works council head Rainer Einenkel told the Welt am Sonntag paper that Opel workers, set to take a 10 percent stake in the new Opel, would insist on veto power over job cuts, plant closures and transfers of production.

This stance had been agreed with other Opel labor leaders and would be in line with the influence labor has at Germany’s Volkswagen, Europe’s biggest carmaker, he said.