Germany's Glos Threatens EADS Over Airbus Cuts

February 5, 2007

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Germany may cancel orders placed with European aerospace firm EADS if the company shifts production at its Airbus unit out of the country, German Economy Minister Michael Glos was quoted as saying on Sunday.

"We insist that Germany remain a high-tech location for Airbus, especially where the manufacture of fuselages is concerned," Glos told Bild am Sonntag newspaper.

"If that isn't the case, Germany would have to reconsider its weapons orders at Airbus parent company EADS. We will not put up with the planned cuts to jobs and high-tech know-how in Germany under any circumstances," he added.

The German government has expressed concern that Germany could be made to bear the brunt of a savings program at EADS, which has been hit by delays to the new Airbus A380 superjumbo.

Details of EADS's cost-saving program are due to be presented to the company's workforce on February 20.

Christian Wulff, premier of the German state of Lower Saxony, was quoted as saying on Saturday that Glos would meet Airbus Chairman and EADS co-Chief Executive Louis Gallois in Berlin on February 13 and that Chancellor Angela Merkel might also be present.

Unions fear EADS will cut up to 8,000 jobs in Germany, where the aircraft manufacturer employs about 22,300 people. Up to 8,000 supplier jobs are also considered to be under threat.

Merkel's government has repeatedly said it wants to keep German-French ownership parity at EADS. Fears this could be disrupted arose recently when German carmaker DaimlerChrysler said it aimed to sell a third of its 22.5 percent stake in EADS.

Last month Germany found a way to safeguard its influence at EADS when it helped to assemble a consortium of banks to temporarily take 7.5 percent of DaimlerChrysler's stake.

Some German states, including Wulff's Lower Saxony, have indicated they plan to participate in this stake.

Wulff told Bild am Sonntag Airbus needed a cash injection.

"We cannot have decisions being made now out of financial necessity. We need to get the money that's missing into the company instead. That can only be done with an increase in capital on the part of all the owners," he said.

On Friday, more than 24,000 Airbus workers, suppliers and supporters staged protests to fight for the future of the planemaker's seven German plants.

(Reuters)