General Motors is likely to axe some jobs in Europe and may close a plant there as part of a restructuring plan under development to try to return the region to profitability, the company told Reuters on Wednesday.
But a GM spokesman denied a report in the London Daily Telegraph newspaper that it would cut about 3,000 jobs in Europe or the equivalent of two vehicle assembly plants. GM employs 62,000 people in Europe.
“We really haven’t completed the analysis,” into how GM will deal with excess capacity in Europe, GM spokesman Tony Cervone told the news agency. “The number is pure speculation. There is no basis in fact for any number right now.”
GM Europe chairman Fritz Henderson earlier told Reuters on Tuesday at a GM seminar in France that the region would have to “rationalise and deal with our excess capacity.”
“Our view is that today we have a certain amount of excess capacity, we’re going to assume that that’s going to continue, so therefore we have to deal with it today,” Henderson said.
GM has not ruled out closing a manufacturing plant in Europe, Cervone said, but the plan to deal with excess capacity has not been finalised. When asked by Reuters if GM would be able to deal with its capacity issues without job cuts, Cervone answered “not likely.”
Henderson reportedly indicated that one of GM Europe’s assembly plants may ultimately be targeted for closure under the turnaround plan.
Cuts are also likely to be made in GM’s joint venture engine operations with Fiat, Henderson said, adding that the company faced “significant excess capacity in gasoline engines” due to the growing popularity of diesels across Europe.
The joint venture engine company, which employs about 22,000 people in eight countries, said earlier this month that it would lay off 700 workers in October at two Italian factories, Reuters noted.
GM’s Opel, Saab and Vauxhall divisions have been struggling under increasing price pressures in Europe and falling market share due to growing competition from Asian automakers.
To the end of August, GM’s market share year to date in Europe fell to 9.6% from 9.8%, according to car registration data from the European Automobile Manufacturers Association (ACEA) cited by the news agency.
GM last posted an annual profit for Europe in 1999, the report noted. GM set a goal of returning to profitability in Europe this year. But after losing $161 million through the first six months of the year, compared with a loss of $68 million through the first half of 2003, executives have conceded that that goal will be difficult to reach.
Henderson told Reuters on Tuesday that the company would have a plan within two months, or sometime in November.
The news agency noted that Ford is also struggling in Europe. It said last week that it would stop making its Jaguar luxury cars at a plant in Britain, resulting in the cut of 1,150 jobs there, while money-losing Jaguar will also pull out of Formula One racing.