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Opel to Cut 8,300 Jobs, Close Belgian Plant

Further cuts could follow as part of restructuring.

by on Jan.21, 2010

With Astra production to move elsewhere, troubled Opel is closing its plant in Antwerp.

At least 8,300 jobs will be cut and an assembly plant in Antwerp, Belgium closed, as part of a broad restructuring by General Motors’ troubled Opel subsidiary.

It had previously been reported that the company was considering the shutdown of two plants and at least 10,000 job cuts, so further moves could be in store as the German-based Opel takes aim at an underutilized manufacturing base and a bloated cost structure.

“Opel has to reduce its production capacity by 20%,” said Nick Reilly, Opel’s new CEO.  The job cuts and closure, he added, reflect “the tough reality of the current economic environment.”

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While some parts of Europe have been showing financial momentum, in recent months, much of the Continent’s southern tier, countries including Spain, Italy and Greece, are economic basket cases, and that’s translating into a perilously weak automotive market.

Reilly estimated 2010 European car sales would decline 1.5 million units compared to 2009 and would tally 4 million fewer than 2007.

But even without these problems, Opel has been struggling for a number of years and wouldn’t have survived without a bridge loan from the German government, last year.  In turn, Berlin pressed GM to sell a majority stake in the subsidiary before it would offer additional aid.  A deal with the Canadian mega-supplier Magna International fell through, late in 2009, when the new GM board decided Opel was too valuable an asset to relinquish.  The U.S. maker is now seeking alternative aid from European governments and pushing through a massive restructuring.

The need to trim production has been a given, for Opel, for more than a year, and the Antwerp facility was given little chance of survival considering it had been scheduled to lose production of the Astra, one of Opel’s mainstays.  The Belgian government had offered more than $700 million in aid to GM, hoping to stave off closure, but the bid was rejected.

It’s unclear if and when further cuts cut follow.