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Opel looks to replacement-part outsourcing

A joint venture with Cat Logistics could be formed before the end of 2005

Ruesselsheim, Germany. Opel is making more progress in its restructuring. The General Motors-owned German brand is partially outsourcing replacement parts logistics operations at two big plants.

"By the end of the year at the latest, the company's top management intends to transfer parts and accessories activities at the Ruesselsheim and Bochum plants (in Germany) to a joint venture with an external specialist company," said Klaus Franz, head of Opel's works council.

More than 1,000 Opel workers, about half from each factory, will be affected, Franz said. The external partner is reportedly Cat Logistics, the logistics unit of the American construction machine company Caterpillar Inc. Other interested parties, such as the Stinnes Group, are no longer believed to be in the running, sources say.

Neither the works council nor the involved companies would confirm this, citing a confidentiality agreement.

Unions will fight job and pay cuts

At first, the outsourcing would not offer Opel substantial savings "because we will only agree to this step if the affected co-workers receive a 10-year contract that assures them Opel conditions," Franz said.

He said that company executives want "to whip the high-margin replacement part business into shape" with the help of Cat Logistics. The replacement parts business has come under pressure for reasons relating to employee leave policies, he said.

An Opel spokesperson also points to "advantages resulting from joint investment and progress in the development of leading procedures in the field of parts logistics."

One source of contention is Opel executives' plan to cut 120 employees who work in parts logistics in both 2006 and 2007.

"We won't accept that," Franz said. "An in-sourcing solution has to be found." The "Pact for the Future" signed in March is completely valid, he said. That accord excludes operational layoffs and factory closings until the end of 2010.

General Motors Europe reported 37 million euros second-quarter profit, not including restructuring costs, its first operating profit in five years. Opel/Vauxhall accounts for about 80 percent of GM's European results, according to earlier company statements.

"I am cautiously optimistic about the entire year," said Hans Demant, Opel's managing director.

Demant has dashed two main demands of the Opel works council. "We have absolutely no plans to bring a compact car like our Trixx concept vehicle into production," he said. Trixx is a Smart-style city car. Smart, owned by DaimlerChrysler, has struggled to make money with such a concept. "We are leaving this segment to our sister brand Chevrolet," Demant said.

In addition, he said there has been "a clear decision" internally not to export any Opel models to the United States. "In that, nothing has changed."

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