German Plant Beats Out Sweden As Center for GM's Midsize European Cars

FRANKFURT, Germany March 4, 2005; Melissa Eddy writing for the AP reported that General Motors Corp. on Friday chose its Ruesselsheim, Germany plant to build midsize cars for Europe over a plant in Sweden as the automaker strives to cut costs and head off bruising competition.

The automaker had said that only one of its European plants would produce the next generation of midsize Opels and Saabs, currently made at both Ruesselsheim and the Saab plant in Trollhaettan, Sweden.

GM said it based the decision on factors including labor costs, plant efficiency, logistics and currency issues.

"The study revealed that the best business case for this product allocation is the Ruesselsheim plant, which will be able to substantially improve its productivity," GM's European subsidiary, Adam Opel AG, said in a statement.

"Both facilities put their best foot forward," said Fritz Henderson, chairman of GM Europe. "The business case over time for the Ruesselsheim facility was approximately 200 million euros (US$262 million) more cost effective than that of the Trollhaettan facility."

Ruesselsheim is GM's biggest plant in Europe, with some 20,000 workers. The company has said it plans to cut 2,700 jobs from the plant as part of restructuring its European operations.

Details of a long-sought deal with workers at the plant, including a wage freeze and reducing benefits, were expected to be announced later Friday.

GM has said it has to reduce costs at its money-losing European operations -- Opel, Saab and Vauxhall -- to cope with sluggish consumer demand and increased competition from Japanese and other carmakers.

GM Europe announced last year that it would cut as many as 12,000 jobs in Europe. GM said 15 percent of management jobs in Europe would be eliminated as part of the program, which aims to produce cost savings of $665 million a year.

For years, General Motors let its regional divisions design and build cars independently. Now, the company is seeking more shared development and parts.

The mid-size Epsilon platform, to be built at Ruesselsheim from 2008, can serve as the basis for either an Opel Vectra or a Saab 9-3.

GM said it was still committed to production at Trollhaettan. In addition to a new mid-sized Cadillac built for the European market, the company also plans to keep producing other Saab models at the plant at least through 2010 and would expand the Saab line to include an unspecified new "crossover" vehicle.

"Furthermore, we will make every attempt to allocate additional future products to this facility," said Carl-Peter Forster, president of GM Europe.

Of Trollhaettan's 53,000 residents, nearly 6,000 work for Saab.