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GM to axe U.K. plant
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December 12, 2000: 12:09 p.m. ET
Vauxhall Motors to cut 2,000 U.K. jobs, more to go across Europe
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LONDON (CNNfn) - General Motors Corp. announced plans Tuesday to cut 5,000 jobs in Europe, including the closure of its Luton, England car-making plant, as the automaker battles widening losses across the region.
GM said the job cuts, including about 2,000 at its Luton plant outside London, would come over the next 18 months, and result in a 10 percent reduction in its European workforce. It also forecast a "much larger loss" in the fourth quarter of the year than the $181 million deficit it racked up on the continent in the third quarter of 2000.
The world's largest auto manufacturer said parent company profits would be negatively impacted by the poor performance in Europe, as well as the decision to scrap its U.S. brand Oldsmobile, the country's oldest.
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 GM'S PROFIT WARNING
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GM's fourth-quarter net income is likely to be between $1.10 and $1.20 per share, against previous estimates of $1.70. Net income (before one-time items) will be between $550 million and $600 million. Last year in the same period the firm earned $1.86 per share.
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The Detroit-based firm operates through the Adam Opel AG and Vauxhall brands in Europe. Vauxhall, its U.K. unit, will scrap the Vectra sedan model – which as recently as 1997 ago commanded roughly 2.4 percent of Europe's total car market – and focus only on commercial and off-road vehicles, including vans and light trucks.
GM Europe's total capacity will be reduced by more than 400,000 units by 2004. The European unit will cut salaried employment by 10 percent, which combined with the Luton cuts will trim total employment by 5,000 in the next 12 to 18 months, the company said.
Union officials said they would protest against the job cuts at British subsidiary Vauxhall.
"Vauxhall has made a number of commitments to us at Luton over the past two years," said Andrew Dodgson, a spokesman for the Transport and General Workers Union. "We would find any decision to close Luton totally unacceptable."
The only car produced at Luton, the Vectra, has seen sales decline over recent years, losing market share even as the industry-wide deliveries of mid-size cars shrank.
"The Vectra's market share is probably not where we want it to be," Stefan Weinmann, a GM spokesman in Zurich told CNNfn.com.
The Vectra has seen its market share dwindle to about 1.5 percent this year, Weinmann said. Other woes afflicting Vauxhall include a tough car market in Britain, where consumer agitation has forced down prices and tough competition.
The weak euro compared to the British pound – and Britain's refusal to commit to joining the 11-nation euro zone – has led many manufacturers to threaten an exit from the U.K. because a strong pound makes the cost of doing business there more expensive.
Ford Motor Co. (F: Research, Estimates), second to GM in the world motor industry, last spring said it would end car production at its Dagenham plant outside London, with the loss of 1,900 jobs. In one of the most controversial incidents in the U.K. auto industry, Germany's BMW AG bailed out of its U.K. unit Rover for a pittance earlier this year as the red ink at the unit threatened the parent's financial health.
Several Japanese companies have also decried the unwillingness of the Blair government – which itself brokered an effort to keep BMW in the U.K. – to commit to the euro. 
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Vauxhall
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