RUESSELSHEIM, Germany, Oct 14 (AFP) - US auto giant General Motors got tough with its loss-making European activities on Thursday, announcing plans to axe one in five jobs in the region over the next two years in a brutal bid to drive the businesses back to profit after six years of losses.
GM, the world's biggest car maker, said it would axe 12,000 jobs from a total European workforce of around 60,000 over the next two years, with German unit Opel to bear the brunt of the cuts.
And GM Europe chief Fritz Henderson said that while there were no immediate plans to shut down any plants, as unions and politicians had initially feared, factory closures could not be ruled out altogether.
The job cuts -- around 90 percent of which would be made next year -- were part of GM's plans to cut costs at its European activities, which have been entrenched in loss since 1999, by 500 million euros (610 million dollars) by 2006.
In addition to Opel in Germany, GM also owns Vauxhall in Britain and Saab in Sweden.
The drastic measures were necessary to address the negative outlook for the European auto market, where demand for new cars was expected to remain sluggish, competition from other car makers -- both European and Asian -- would likely increase and car prices fall in the coming years, GM Europe said.
The car maker did not say exactly how many jobs would be cut at Opel or elswhere, or where precisely the cuts would be made.
That would be decided in negotiations with unions and labour representatives that were scheduled to start straight away.
But media reports said 4,000 jobs were on the line at Opel's main manufacturing site in Ruesselsheim, near Frankfurt, and another 4,000 at the factory in Bochum in the heavily industrialised Ruhr region.
Opel's two other German factories in Kaiserslautern and Eisenach would not be affected.
GM Europe chief Henderson said he was convinced for the time being that the cost cuts could be made "without closing plants."
The job cuts would be effected via short-term measures for the time being instead.
But he cautioned, rather ominiously, that "we can't rule out anything."
Over the past few days, speculation has reached fever pitch that GM Europe could close a production site and the Ruesselsheim and Bochum factories had been seen as the most likely candidates for closure.
GM has recently said it wants to build its mid-range Saab and Opel models at one and the same plant, meaning that either the Ruesselsheim factory or the Saab plant in Trollhaettan in south west Sweden could eventually be shut down by 2009 or 2010.
A comparison of production costs at the different factories is far from flattering for Ruesselsheim, where they are 44 percent higher than those at the Saab plant and as much as 85 percent higher than at GM's factory in Poland.
Job-cutting plans of such magnitude have inevitably become a political issue in Germany, where many major companies, particularly in the key automobile sector, are busy downsizing their workforces at a time when unemployment remains stuck above four million.
Volkswagen, Europe's biggest car maker, has threatened to axe 30,000 jobs if it fails to secure an agreement with unions over massive cost-cutting plans.
Such was the crisis at Opel that Economy Minister Wolfgang Clement travelled to Bochum on Thursday to meet with the regional state premier of North Rhine-Westphalia Peer Steinbrueck and his economy minister Harald Schartau as well as employee representatives and unions.
Clement had cancelled a meeting with French Finance Minister Nicolas Sarkozy at the last minute to go to Bochum.
The car maker said it expected unions to agree to the belt-tightening plans.
"GM Europe has undergone significant change and restructuring in the last three years with the support of both our workers and the respective work councils," chairman Henderson said.
"We anticipate working constructively with the works council to arrive at a creative solution to our current challenge."