Opel skirmish a headache for Magna

AP FILE PHOTO

Opel headquarters in Ruesselsheim, central Germany.

FRANKFURT/BRUSSELS–A Canadian-Russian consortium's plan to buy automaker Opel from General Motors faced more hurdles as scrutiny of German state aid intensified and labour leaders demanded a veto over job cuts.

The skirmishing posed headaches for Aurora-based automotive supplier Magna and its Russian allies in what has become a politically fraught deal to build loss-making Opel into a power on global car markets.

Former Belgian prime minister Guy Verhofstadt said he had asked European Commission President Jose Manuel Barroso to ensure that the deal did not favour Germany over other countries such as Belgium and Britain that also host GM plants.

The issue will come up today when the European Parliament debates the Opel transaction.

GM agreed last week to sell a 55 per cent stake in Opel to Magna and Russia's Sberbank. Reports Saturday said that more than $900 million in German state aid planned for Opel is earmarked to modernize the Russian automotive industry according to the Magna plan.

Germany is putting up 4.5 billion euros ($7 billion, Canadian) in state guarantees to grease a deal it hopes will preserve jobs in Germany, where half of Opel's workforce is based.

Magna has declined comment ahead of a news conference today.

Magna's original plan called for cutting around 10,000 of Opel's 50,000 workers, with 2,500 cuts earmarked in Germany.

But German magazine Der Spiegel reported on Saturday that in fact Magna planned to cut 3,000 assembly line jobs and another 1,100 white-collar posts in Germany.

That sets up a clash with Opel labour, which opposes any forced layoffs or plant closures in Europe.

From the Star's wire services

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