GM stuns Volkswagen by hanging on to Lopez

DETROIT (Reuter) - Ignacio Lopez de Arriortua, purchasing head of General Motors, the US car giant, is to stay with the company.

The move is a stunning reversal for GM's rival, German Volkswagen, which on Friday had announced that Mr Lopez had agreed to join its management board.

But yesterday GM said the famous cost-cutter would remain with the company indefinitely.

'I can confirm that Mr Lopez will stay with GM,' said James Crellin, GM spokesman. 'We will have more details tomorrow.'

Mr Crellin declined to comment on how Mr Lopez's departure was thwarted.

A US newspaper article suggested that the company had held Mr Lopez to clauses in his contract of employment that limit the conditions under which he can work for competing car makers.

Mr Lopez, a feisty Spaniard with a reputation as a ruthless cost-cutter, is credited with saving GM about dollars 2bn in its ailing North American automotive operations in the past year by gaining price cuts from components suppliers and creating a new culture of efficiency.

He joined GM's European operations in 1980 and was brought to Detroit in May 1992 to help stem GM's massive losses in North America.

In addition to demanding steep price cuts, he has sent teams of cost-cutting specialists into GM and supplier parts factories to find savings that could be passed on to the company.

VW, seeking to slash its high production costs in Germany, wanted Mr Lopez to implement the same type of cost-cutting measures he used in the 1980s to turn GM's Opel/Vauxhall units into Europe's most profitable car maker.

VW said Mr Lopez had asked that his appointment be delayed for up to a year.