Framework Agreement Reached on Restructuring Program for GM in Europe

Plan meets target to reduce structural costs by 500 million euros

Zurich. General Motors Europe and the European employee representatives have agreed on a framework contract for restructuring the company’s operations in Europe. The agreement provides for a sustained improvement of the organization's business situation by reducing annual structural costs by 500 million euros. The necessary workforce reduction is expected to be conducted in a socially acceptable way.

The restructuring initiative focuses on General Motors’ operations in Germany. Separate agreements are being negotiated to reduce the workforce in Belgium, Spain, Sweden and the U.K.. Job reductions will also include a 15 percent cut in managerial positions across Europe. In total, the program has the potential to achieve a reduction of the General Motors workforce in Europe by up to 12,000. The restructuring program is scheduled for implementation in the course of the next two years with the aim of achieving the vast majority of the targeted savings in 2005. Investment in future product development will not be affected.

GM Europe Chairman Frederick A. Henderson said: “Improving our competitiveness is the only way to safeguard the future for all our stakeholders. The negotiations were conducted in a fair and constructive manner throughout and the decision to take these inevitable measures was difficult for everyone. Both management and employees’ representatives did everything in their power to find solutions that respect our social responsibility for our employees and their families.”

GM Europe President Carl-Peter Forster said: “Facing the realities of the market is absolutely imperative. Over the past three years, we worked very hard to find other solutions. Contrary to all forecasts, however, the market has not improved. This restructuring program will give our brands the economic freedom they need to continue their model offensives. Over the coming five years, GM will introduce 45 new models and variants in Europe to further strengthen the Opel/Vauxhall, Saab and Chevrolet line-ups.”

The agreed principles of the European framework will now be implemented in the various European countries, where ongoing negotiations will be finalized in the near future.

In Germany, the restructuring program consists of four principal elements: the establishment of transfer and qualification companies, early retirement programs, severance programs, and lastly outsourcing selected operations. These programs are supposed to prevent forced layoffs and have the potential to reduce head count by 10,000.

As part of the restructuring program, a total of approximately 2,000 jobs will be cut at GM's plants in Antwerp, Belgium; in Zaragoza, Spain; in Trollhättan, Sweden; and in Ellesmere Port, U.K.