GM's talks to dump European unit sparks backlash

Company has 38,000 European employees

LONDON (CNNMoney) - General Motors may finally be prepared to jettison its struggling business in Europe.

Just one problem: GM's acknowledgment that it is considering a sale of its Opel and Vauxhall brands has set off a major political backlash in Europe that threatens to strangle any deal in its cradle.

Politicians and union leaders in Germany, France and Britain have expressed worries that jobs will be lost of a result of GM's intention to sell the companies to France's PSA, the owner of Peugeot and Citroen.

"We've got no intentions of allowing a single job loss," Len McCluskey, general secretary of Britain's Unite union, said during a television interview.

GM has 38,000 European employees, with more than 18,000 Opel workers in Germany and 4,300 Vauxhall employees in the U.K. In France, unions worry that PSA could also be in line for job cuts if a deal is struck.

"There is a lot of anger, disappointment and of course surprise," said McCluskey. "I met with our British government yesterday and they are going to get deeply involved in this."

GM CEO Mary Barra visited Opel's headquarters in Ruesselsheim, Germany, on Wednesday. GM executives also spoke with Greg Clark, the U.K.'s business secretary.

"We're not going to sit on the sidelines and allow this to happen, and hopefully our governments won't either," said McCluskey.

GM has not posted a full-year profit in its European operations since 1999. Its losses there starting in 2000 have now topped $18 billion, according to the company.

Last year was actually one of its most successful years, as it trimmed losses to only $257 million, down 68% from the 2015 losses.

But there are concerns that the U.K's plans to exit the EU could send those losses higher in coming years. Key elections slated for later this year in France and Germany are likely to complicate matters further for GM, especially since the French government own 14% of Peugeot.

The 1.2 million Opels and Vauxhall cars GM sold in Europe last year were only a fraction of the cars it sold in its two largest markets, China and the U.S., which each bought more than 3 million GM cars. Still GM's European sales amount to 12% of its global sales.

One of the things GM did as its effort to stop European losses was three years ago it dropped the Chevy brand out of Europe: That makes it somewhat easier to exit Europe.

GM looked at bailing out of Europe once before, as it actually reached a deal to sell Opel to Canadian auto parts maker Magna International in 2009. The deal was announced just days before GM's bankruptcy filing. But it dropped that deal later that year after it emerged from bankruptcy, and made a new commitment to its European operations.


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