The European motor industry is approaching a state of crisis with too many cars and not enough buyers. Nigel Burton reports on the first round of bloodletting.

THE Germans once laughingly referred to industrial unrest as "the British disease." Nowadays, it's a disease that appears to be contagious.

Earlier this month, hundreds of workers gathered outside the factory gates of an Opel car plant in Bochum, Germany. They were there to protest against plans by parent company General Motors for thousands of job cuts.

Workers led an impromptu walkout after GM spelled out its plans to revitalise the Opel brand by cutting 12,000 jobs by the end of 2006. Most of the losses will be in Germany.

Although no one has yet pointed the finger at those factories under threat, it is widely agreed that Bochum, in the industrial Ruhr region, has what the company euphemistically describes as a "competitiveness issue".

The Bochum plant manufactures body panels, engines, transmissions and exhaust systems, as well as Astra hatchbacks and the Zafira medium-sized people carrier.

The strike disrupted production at another Opel plant in Ruesselsheim caused by a shortage of parts normally manufactured in Bochum.

GM has ambitious targets. It wants to slash more than $600m in annual costs within two years.

To do that, it may have to take dramatic measures.

There are scores of GM subsidiaries operating in Europe. Among the biggest are Opel, Vauxhall and Saab but the group also owns many more smaller satellites.

According to German workers' representatives GM is now looking at a radical merger plan that will establish a "European Corporation" based in Brussels.

The plan was revealed by Klaus Franz, head of the Opel general works council, who said the idea would make existing complicated structures obsolete.

GM is attracted to the plan because of its simplicity.

Merging its operations would cut out the need for separate negotiations between unions and the boards of Opel, Vauxhall and Saab. The head of GM Europe, Fritz Henderson, would take the reins of the new corporation, with GM Europe's president Carl-Peter Forster acting as deputy.

If Brussels is selected for the new corporation it will replace the headquarters in Zurich.

Individual companies will keep their corporate identities, however, so there is no prospect of the Vauxhall badge disappearing in the shake up.

Of course, all of this is dependent on the success of talks between the company and unions.

Workers' representatives are demanding assurances that GM will not seek compulsory redundancies. If they don't get them, then in the words of employee representative Klaus Hemmerling: "This will be the longest labour dispute that Opel has ever seen."

Published: 02/11/2004