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GM arm to shed jobs

Frankfurt, Nov. 27 (Reuters): General Motors Corp’s loss-making Saab unit said on Wednesday it planned to cut 20 per cent of its workforce, or about 1,300 jobs, in an overhaul aimed at improving the Swedish car maker’s financial situation from 2003.

Saab said the job cuts, mainly in Sweden, would be accompanied by a streamlining of its engineering organisation and co-operation on cost cuts with other GM units in a bid to improve efficiency in all areas of the business.

“The aggressive efficiency programme presented today aims at enabling the company to improve the financial situation beginning in 2003,” Saab said.

The company did not say when it expected to return to profit, and a GM Europe spokesman declined to elaborate on the statement.

The measures underline the problems facing GM’s European operations which are struggling against declining demand in Europe where 30 per cent over-capacity is also forcing other carmakers, including Fiat, to downsize. Saab Automobile blamed start up costs for its new 9-3 saloon, investments in its main Trollhattan plant and a deteriorating dollar exchange rate to the Swedish crown for a first half loss of 1.2 billion Swedish Krona ($ 131.4 million).

Saab, whose brand has deteriorated from the desirable status it enjoyed among young urban professionals in the late 1980s, has lost money in 10 of the last 12 years and last reported profits in 1994 and 1995 following the launch of the 900 car. Analysts believe Saab may post an operating loss of about 500 million euros this year.

The unit hopes new versions of the new 9-3, including a station wagon and convertible, will help to boost revenues and return Saab to profitability.

Saab has already cut its unit sales target for this year to 125,000-130,000 from a previous goal of 140,000 and aims to sell around 200,000 vehicles per year by about 2005.

GM Europe, which includes the Vauxhall and Opel brands, also in the midst of a restructuring, has said it will miss this year’s target of halving its full year loss to around $ 350 million from last year.

According to data from European carmakers association ACEA, GM’s west European market share has slipped to 9.9 per cent in the first 10 months of the year from 10.9 per cent in the same period a year ago and Saab’s share is unchanged at 0.5 per cent.

“In view of the aggressive action plan to improve Saab’s efficiency and to increase its volume and revenue base, we are confident that the company is now on the right track,” said GM Europe president Michael Burns in a statement. “Saab plays a key role in GM’s brand portfolio and has full access to GM’s capabilities,” he added.

The measures, which Saab hopes will improve productivity 20 per cent in manufacturing, include 800 job cuts in production, 450 in engineering organisation and 50 in sales and marketing.

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