By Chris Reiter and Cornelius Rahn
(Bloomberg) – General Motors Co.’s Opel division employees will demand a bigger role in company decisions now that the carmaker has dropped a plan to sell the European manufacturer, the unit’s top labor leader said.

Workers want GM to convert Adam Opel GmbH into a joint- stock company to increase their power, Klaus Franz, head of Opel’s works council, said today at a rally at the division’s headquarters in Ruesselsheim, Germany. A 10 percent stake for workers proposed by Magna International Inc., the Canadian manufacturer that tried to buy Opel, would be a “farce” under GM ownership, Franz said.

GM’s board decided on Nov. 3 to keep Opel instead of selling a 55 percent stake to Magna and Russian partner OAO Sberbank, reversing a September decision. The Ruesselsheim rally attracted 10,000 workers, and employees at Opel’s three other German plants also held strikes to protest Detroit-based GM’s reversal, according to the works council.

“The credibility of GM management is close to zero,” Franz said. “GM’s concept is not future-oriented and there won’t be a single cent’s worth of concessions from workers to back it.”

German corporate rules give labor representatives about half the board seats in a joint-stock corporation, which is designated with the initials “AG” and is the form most listed companies use. Opel is now structured as a limited-liability company, which gives employees less decision-making power.

Magna vs GM

Magna, Canada’s biggest car-parts maker, was pledging new technologies and models such as a minicar and two niche vehicles, in contrast to GM’s most recent business plan in May that “focused on cutbacks” and targeted three plants for closure, Franz said.

The U.S. carmaker’s outline called for splitting job cuts at Ruesselsheim between management and the research and development team, while Magna would have eliminated only administrative positions, he said.

“There is a danger that development projects are being siphoned off to the U.S. and that has to be prevented in the labor contracts,” Franz said.

Karin Kirchner, a spokeswoman for GM in Zurich, declined to comment today on remarks made at the Ruesselsheim rally or by politicians in Europe.

Labor-Cost Agreement

Employees at Opel and its Vauxhall car brand in the U.K. agreed to annual labor-cost reductions of 265 million euros ($394 million), the works council said on Nov. 3, hours before GM decided against the division’s sale. Aurora, Ontario-based Magna demanded the concessions in return for providing the 10 percent stake in Opel to employees. GM would have held 35 percent of Opel under Magna’s plan.

Any new talks on spending cuts under GM’s majority ownership will have to include “alternative forms of material security” for the labor stake, Franz said today.

About half of Opel’s 50,000-person workforce is at the four plants in Germany, and 5,000 are employed at Vauxhall. British labor leaders said yesterday that they were pleased GM is retaining Opel. The division also has plants in Belgium, Spain and Poland.

Workers at the plant in Antwerp, Belgium, plan a walkout tomorrow. Miroslaw Rzezniczek, deputy head of the Solidarity union’s chapter in Gliwice, Poland, said Opel labor leaders there are “waiting to see what new ideas GM has.”

Magna and Sberbank planned to invest 500 million euros in Opel and were considering a role for OAO GAZ, a Russian carmaker, in the partnership. A transaction was also tied to Germany providing as much as 4.5 billion euros in financing, including 1.5 billion euros offered to help Opel survive when GM filed for protection from creditors in the U.S. in early June.

Meeting Repayment Deadline

GM never fully drew down the six-month bridge loan and intends to repay Germany’s government by the Nov. 30 deadline, Chief Executive Officer Fritz Henderson said today at a media roundtable in Detroit. The U.S. carmaker is outperforming its post-bankruptcy plan, he said, without giving specifics.

General Motors has already refunded 300 million euros to Germany and has no more than 800 million euros outstanding, Dirk Pfeil, a board member of the trust overseeing Opel, said in an interview today.

German federal and state officials will meet with GM executives in a week to discuss Opel’s reorganization plans, Matthias Machnig, economy minister of the German state of Thuringia, said today by phone.

Governments will need to be persuaded that GM can carry through with an all-new plan for Opel after it rejected “everything that we negotiated about over the last months,” Roland Koch, prime minister of the state of Hesse, said in a Bloomberg Television interview at the Ruesselsheim rally.

‘Responsibility Alone’

“The solution that GM is thinking about at the moment is impossible without investing American money,” Koch said. “I’m sure the board of GM did know that when they decided” to keep Opel. “It shows us that they want to have control alone, and now they have responsibility alone.”

Russia’s government was offering a 250 million-euro guarantee for the Opel purchase, President Vladimir Putin said. GM has been “contemptuous toward its partners” in western Europe by reversing course, he said at a government meeting broadcast on Russian national television today.

“The refusal to complete the deal at the last minute really doesn’t hurt our interests, but it does say something about the peculiar culture of American partners’ relations with their counterparts,” Putin said. “We’ll have to take that way of doing business into account in the future.”

GM may have damaged its opportunity to add markets following the reversal on Opel, works council chief Franz said at the rally.

“Do you think GM would have any prospects in Russia after they played such a trick on the Russian government?” Franz said. “I don’t think so.”

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