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FRANKFURT, Germany (Reuters) -- General Motors will cut up to 12,000 jobs over the next two years to reduce annual costs at its European operations by 500 million euros ($613.4 million) by 2006, it said on Thursday.
Most of the job cuts will come in Germany and 90 percent of the reductions will take place in 2005, the world's biggest carmaker said in a statement.
GM made no mention of plans for specific plants. It said the company expected to take charges in 2005 and 2006, the amount and timing of which would depend on negotiations with works councils.
The job cuts come as the latest blow to carmaking in western Europe that is desperately trying to cope with a toxic mixture of stark currency headwinds, high labour costs and intense competition in weak car markets.
"With losses since 1999 and no reasonable indication that market or economic conditions will improve substantially in the coming years, we have no other choice than to take tough steps to ensure our long-term success," General Motors Europe Chairman Fritz Henderson said.
This should not be seen as a lack of commitment to grow the company or provide new products, he added, "but the lack of industry growth, the pricing environment and the competitiveness of the market do not allow us to grow fast enough to offset the cost base we have today."
GM employed around 63,000 people at 11 production and assembly plants in Europe at the end of 2003.
GM Europe's loss widened in the second quarter to $45 million from $3 million a year earlier amid intense pricing pressure, adverse currency impact and restructuring costs for a joint venture with Fiat.
That brought its first-half loss to $161 million versus $68 million in the first six months of 2003. It abandoned its original target of making a profit in Europe this year.
GM is due to report third-quarter results later on Thursday.
GM had already reduced capacity in Europe by 28 percent from 1999 levels but has acknowledged it has to take a tougher line on cutting costs and boosting revenue.
It clipped the wings of its independence-minded European divisions in June by concentrating power at its regional headquarters in Zurich under a beefed-up management team, but stopped short then of announcing job cuts or plant closures.
Fritz Henderson was brought in in June to turn around GM's European operations after a stint in Asia/Pacific.
Carl-Peter Forster, the head of biggest GME division Adam Opel AG until June, became Henderson's direct deputy as GME president and the man with the whip hand.
Ford's luxury brand Jaguar is cutting 1,150 jobs in Britain in a bid to return to profit and Volkswagen is trying to push through a 30 percent reduction in German labour costs by 2011 in touch talks with unions.
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