£90m in bonuses for GM German workers

£90m in bonuses for GM German workers

By Tom Mcghie
Last updated at 9:00 PM on 28th November 2009

 
 

All 25,000 General Motors car workers at Opel in Germany will get a £3,600 Christmas bonus this year while their colleagues at Vauxhall in the UK suffer a five per cent pay cut, company sources have confirmed.

But the Germans look as if they will pay for their bonuses by joining the dole queue as GM prepares to make more than 5,000 of them redundant.

Only a few hundred employees at Vauxhall’s Luton van plant will lose their jobs, while all 2,500 workers at the factory at Ellesmere Port, Cheshire, have been told they will be kept on.

 
Opel: Thousands of workers will be made redundant in Germany

Opel: Thousands of workers will be made redundant in Germany

Opel workers are furious that a deal between GM and Canadian car parts giant Magna, which would have guaranteed them fewer redundancies, was aborted. As part of that arrangement, the German workers had agreed to forfeit a pay rise and a Christmas bonus.
 

After the deal collapsed, the Opel unions insisted that the company should hand over the Christmas bonus, as well as backdating the pay increase that was promised but never implemented.

 

 

 

GM is being forced to pay the money because Germany’s strict laws ensure that employers must stick to agreements. Instead, the company plans to make thousands of Opel workers redundant to compensate for their inefficiency compared with British workers.
 

Vauxhall’s two plants are more productive than all four German plants put together.

A company source told Financial Mail: ‘They may have their Christmas bonus, but they could be paying for it with their job.’

The fact that GM was in a position-to pay the £90 million bonus is a stark illustration of how the car industry has staged an astonishing recovery.

A year ago it was on the verge of collapse and America’s car giants – General Motors, Chrysler and Ford – were heading for bankruptcy. European manufacturers were in turmoil, with Vauxhall and Opel on the way to oblivion.

Most car companies, with the exception of Ford and Chinese manufacturers, are still in the red, but the billion pound losses have been stemmed and car makers expect to make money by 2011.

While sales have slumped in the UK, vast profits have been made in the booming Chinese market by Ford, GM and Volkswagen.

These profits have helped Western car manufacturers to ride the recession and have given them the breathing space to begin improving their balance sheets.

In January, China overtook the US to become the world’s biggest car market, with annual sales of more than ten million. Meanwhile, American sales are languishing at a 26-year low.

Sales in China have continued to soar this year, helped by its government’s decision to spend £436 million on subsidies to farmers to replace old, inefficient vans. A further £900 million went to car makers to upgrade their technology and to help to develop alternative-energy vehicles.

It is the foreign car makers, struggling at home, who have been able to exploit the booming Chinese market. Nick Reilly, General Motors’ Asia chief, said sales in China were up 60 to 65 per cent. ‘We are spinning off cash over there,’ he said.

GM plans to invest more than £600 million a year on bringing 30 new or revamped models to the Chinese market by 2014. Peugeot Citroen has announced that it will launch two new models in China every year for the next five years.

It is the same story for Ford and Volkswagen, which are working in joint ventures with Chinese companies and enjoying record sales.

But while these Western companies are busy reaping huge rewards in China, their supremacy may not last long.

China’s leaders are aiming to turn their country into a world leader in hybrid and all-electric cars in just three years.

 

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