GM Europe won't outsource key brands output

FRANKFURT -- General Motors Europe has pledged not to outsource production of its Opel, Vauxhall or Saab brands from existing plants until the 2012 model year, the carmaker's European works council said on Tuesday.

"This commitment from General Motors Europe means we have been able to counter the constant fear that jobs will be shifted from the West to the East," works council head Klaus Franz said in a statement.

GM Europe, which has cut its workforce by around a fifth to stem chronic losses in a region where it last made an annual profit in 1999, could not be reached immediately for comment. It is on track to make money in 2006.

GM Europe operates 11 vehicle production and assembly plants in eight countries, but is closing a Portuguese plant.

It agreed last month to build entry-level Chevrolet cars under contract at a plant in Poland from next year, and is in the running to buy a car plant in Romania.

Those moves have sent a shiver down the spine of its western European workforce, which expressed concern that the world's biggest carmaker was systematically moving output eastwards, where labor costs are dramatically lower.

GM Europe had insisted that was not the case, but stressed that its plants in western Europe have to set productivity benchmarks to compete against low-cost rival centers.

A key test comes next year, when GM decides where to build the next generation of its Astra compact car. Plants in England, Belgium and Germany make the current Astra, while factories in Sweden and Poland also want to be considered for the work.

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