February 19, 2009 at 3:22 pm

GM may sell Saab, Opel stake

Automaker seeks $1.2B in European labor savings, on top of existing measures.

General Motors Corp., facing the biggest crisis in its 100-year history, may sell a stake in its German carmaker Adam Opel and could abandon its sporty Swedish brand Saab in an effort to slash costs abroad as well as at home.

GM's European division and the top representative of its European employees issued a joint statement Wednesday saying they were looking for ways to reduce costs further without resorting to firings and plant closings.

The automaker is seeking $1.2 billion in labor cost savings, on top of existing measures, including a wage freeze, GM Europe President Carl-Peter Forster said.

"Management is willing to consider strategic third-party partnerships, alliances and equity stakes in case such an approach is seen as beneficial for GM Europe and Opel's viable and sustainable future," Forster said.

His comments underscored the global nature of GM's latest restructuring effort, outlined Tuesday in a plan submitted to the U.S. Treasury Department under the terms of a loan agreement.

GM said 26,000 of the 47,000 jobs it plans to eliminate are in its foreign operations, and executives singled out Europe as requiring urgent action.

In spite of deep restructurings and an attractive lineup of cars, including the new Opel Insignia sedan, the German carmaker struggles to make money, while Saab has lost money during most of its 19 years as a GM affiliate. (GM bought 50 percent of Saab in 1990 and the rest in 2000.)

In the latest figures available, GM said GM Europe lost $1 billion in the third quarter of 2008.

The environment has worsened and Europe also is now seeing plunging demand for vehicles.

"We've seen the worst collapse of the consumer economy since the depression of the 1930s," Forster said in a statement posted Wednesday on GM Europe's blog.

"The painful reality is that the markets are not improving and likely will not begin any recovery until well into 2010. Even then, I've seen no forecasts or analysis that shows the European automotive market recovering anywhere near to the levels in 2007 for at least several years."

He said the management and labor representatives needed to examine all options, including factory closures -- which provoke more protests in Europe than they do in the United States.

Klaus Franz, chairman of the General Works Council and of the European GM Employee Forum, earlier this week advocated a spinoff of Opel and Saab to save jobs and plants. "There is no future with GM," he said.

According to a report in Financial Times Deutschland, German regional and federal government officials met recently to discuss the possibility of taking a stake in Opel.

The German government has offered to provide up to $2 billion in loan guarantees for the GM subsidiary. According to European media reports, GM is seeking more aid but Chancellor Angela Merkel said Wednesday that she wanted to see a restructuring plan for Opel from GM. Opel employs 26,000 workers at four plants in Germany. GM also is seeking $1 billion in support from Sweden for Saab.

GM President Frederick Henderson did not detail GM's proposal to the Swedish government in a call Wednesday with financial analysts. But he said if GM did not reach a deal with the Swedish authorities, "we could very well find we would need to have the Swedish business file for reorganization, perhaps as soon as this month."

Analyst Tim Urqhart at forecasting firm IHS Global Insight said Saab's viability was in doubt after a 34 percent drop last year in its sales to just 92,000 vehicles.

While GM has previously said it may wind down the Saab brand, it had not raised the possibility of selling a stake in Opel -- the core of its European operations and one of GM's first foreign acquisitions, purchased nearly 80 years ago. Opel includes the Vauxhall brand, the name under which Opel vehicles are sold in Britain.

Staff Writer Robert Snell contributed to this story. You can reach Christine Tierney at ctierney@detnews.com">ctierney@detnews.com.