EU Acts to Quell GM Jobs Auction Fears

Countries offering subsidies for jobs in Opel/Vauxhall division

The European Commission on Nov. 23 gathered ministerial heads from countries with General Motors plants in the face of fears of a subsidy auction over promised job cuts at the company's European unit Opel/Vauxhall. European Union industry commissioner Guenter Verheugen also called in representatives from GM's European arm, which aims to shed 10,000 jobs.

Germany is home to about 25,000 workers, roughly half of GM Europe's total, and Berlin, anxious to keep German plants running, had offered several billion euros in aid for a previously accepted takeover of Opel. GM abandoned that deal last month but is again working on a 3.3-billion-euro (US$ 5 billion) restructuring plan.

German magazine Spiegel said the company had received offers of 400 million euros from Britain and between 300 and 400 million euros from Spain, as well as proposed tax breaks from Poland. There are also GM Europe plants in Austria and Hungary.

The newly-named head of GM Europe, Nick Reilly, was to attend the commission meeting, and Kris Peeters, the head of the regional Flanders government, said he wanted "more explanations" from the company. Belgium's offer of up to 500 million euros to keep a northern Antwerp factory open is "still on the table," Peeters added.

Jochen Homann, German secretary of state for economics, said he was "waiting to see what GM will present," but added: "We won't take part in a competition."

He said all governments could "rely" on the commission to ensure there would be no jobs auction at a time of high unemployment, expected to keep growing at least throughout 2010.

Britain was represented by junior minister for business Ian Lucas. A spokesman said London has "always said we will offer aid" and that it would be consistent with commission state-aid competition rules.

Verheugen said last week that he wanted to "avoid putting jobs up for auction" at GM Europe, known as Opel in most countries and Vauxhall in Britain.

GM stunned the European auto sector earlier this month when it scrapped its decision to sell off its European operation to Canadian auto parts maker Magna International and Russian state bank Sberbank. The decision came amid growing political pressure surrounding a commission probe into suspected abuse of state-aid competition rules.

Copyright Agence France-Presse, 2009

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