GM’s last minute (i.e. post-German election) decision to pull out of a deal to sell its European Opel division to a consortium lead by Canada’s Magna Corporation has left chaos in its wake. The Associated Press reports that Opel workers throughout Europe are planning to strike GM on Thursday, protesting the automaker’s planned “rationalization” of over ten thousand jobs. “IG Metall said workers at Opel’s four German plants would halt work Thursday, followed by similar moves Friday at other Opel locations in Europe.” Meanwhile, German Economy Minister Rainer Bruederle vowed “We will get the taxpayers’ money back.” Note: that’s German taxpayers’ money. And there’s only one way the nationalized automaker’s going to pay back that loan: with American taxpayers’ money. Seriously? Seriously. “GM Europe spokesman Karin Kirchner said the company is prepared to repay the euro1.5 billion bridge loan from the German government. ‘If we’re asked, GM will repay the bridge loan in question.'” Uh, that didn’t sound like a “request” to me. And speaking of plain speaking . . .
“This is an unbelievable action,” Berthold Huber, the union’s president, said. “Opel has been brought to this difficult situation, through years of mistakes by GM’s management. Therefore, it’s not likely that GM will be able to produce a viable solution” for Opel.
So, what’s GM’s plan going forward? Once frshly elected German Chancellor Angela Merkel finished speaking at a joint session of the U.S. Congress and blew town, GM CEO Fritz “I’m a Goofy Goofer” Henderson said GM will work with Europe’s unions “to develop a plan for meaningful contributions to Opel’s restructuring.”
Good luck with that.
If it comes b/t closing shop and restructuring, usually restructuring wins, but we’ll see. Perhaps GM just decided if we can’t have Opel, then no one will, but the intellectual property won’t be going anywhere.
Robert:
The US has 60% of GM, Canada has 12%. Don’t forget us and our measly one member on the GM Board. So yes, I agree, we the taxpayers of the two countries are going to fund this payback. How does that keep jobs in North America? And where is Mexico’s money in this charade? They seem to get the jobs.
These GM people are seriously out of touch. They risk having Germany yank the company out of their hands one way or another. The Germans are seriously pissed off.
Merkel will not appreciate it one little bit having Fritz giving her the news while she was visiting Washington.
The US Treasury denies any knowledge of the GM turnaround decision.
Sure, and I’m an alien from Proxima Centauri.
Meanwhile Frank Stronach says he is glad to save a lot of money. And no doubt, to get out of this ridiculous quagmire.
I was totally shocked when I heard about GM holding on to Opel on NPR this morning. It seems rather disingenious to hold on to something you were more than willing to get rid of just two months ago. Reminds me of that kid who couldn’t play football for sh** but would get all huffy and take away his football when the game wasn’t going his way.
I’m rather disappointed in GM, to put it mildly. I was hoping for a serious change of upper management that is still a long time coming.
Given the engineering importance of efficient small cars going forward, and all the engineering centered in Opel, our pathetically bad investment in GM IS actually made better if GM pays the $2B of our money to keep Opel, because in the long run, ditching Opel would cost GM more.
Selling Opel is selling seed corn.
Even though Opel engineering is world-class, I don’t think Opel will help GM. The problems at GM will not be solved by good engineering. Nor made worse by the lack of it.
Frank Stronach, on the other hand, got lucky. Just as with Chrysler, he loses what he wanted. But Magna is in pretty good shape right now, even with the industry in turmoil. Had Magna bought Chrysler, what shape would Magna be in now? Scary to even think about.
As with Chrysler, so with Opel.
Let the PWNAGE begin… these guys got lucky, didn’t lose it, but there’s no free lunch
Opel is in trouble so the union decides to press the Strike button and blow the company to smithereens.
There is nothing so bolted down there it cannot be stuffed into a container and moved elsewhere.
Guys, stupidity is defined as doing the same thing over and over and expecting a different result.
not to spoil the fun, but the SPIEGEL writes http://www.spiegel.de/wirtschaft/unternehmen/0,1518,659288,00.html that they only used Euro 1.1 billion and had paid back 200 million already.Leaving 900 million euros to pay back by end of this month.
I know still bad, but we need to be accurate to not give the enemy (UAW and other tax wasters) any reason to throw dirt at us :-)
Opel only took 1.1Bn of the 1.5Bn Euros available to them. They’ve already repaid 200M Euros, leaving a debt of just 900M (which is about a gazillion dollars at current exchange rates!!).
But Russian Oligarch-in-chief Oleg Deripaska (scary dude) got an OK from the FBI to make a quicvk trip to the US last week without being prosecuted/ water-boarded for various misdeeds. Anyway, upsetting the Germans is one thing, but it seems that GM have done enough to keep the Russians happy for the time being.
Russia will return to being a big growth market in Europe sometime next year. But it is unlikely the German buying public will be greatly concerned about what GM do with Opel. The brand is not considered to be a cherished German entity like VW or BMW. It’s only the workers in Germany and their gov’t who are cheesed off.
The British unions over at Vauxhall are almost ecstatic that GM are staying in charge. They feel they can do business with GM and trust them mucvh more than the German Works Council leaders. Personally, I think the Germans are bluffing that they will demand 900M Euros back from GM this month, jeopardizing the jobs that are already in place. They would be blamed for any closures. Once the anger dies down, the bargaining will begin.
My two cents on this Greek tragedy.
GM now has three big problems in Germany if they want the plan to have any chance of succeeding.
1. Trust.
The real reason why the Germans wanted GM to sell is very simple: Neither the Government nor the Unions have any faith in GM’s ability to actually execute a reasonable turnaround plan. The mistrust is still well justified, of course, GM’s management being basically the same as before.
2. Politics & Money
There is a lot of anger in Germany about the non-deal, not only at the Government level, but among the public as well. Where, if not from Germany, are the state-backed loans for the restructuring going to come from? The UK? Spain? Poland? (Forget Belgium, Antwerpen is most likely on the dumpster).
Not likely, they are all running massive deficits already, the expected numbers for 2010 are, Germany:5%, UK: 9.3%, Spain 8.1%, Poland: 7%.
3. The Unions.
Are the Unions going to give the same concessions that they agreed to with Magna to GM?. For nothing? (They where going to get 10% of the shares in the new company).
IMHO, this is going to get ugly very quickly, the only remaining question is how quick.
It will be interesting to see how this all folds out. My guess is that the loan will be repaid, just not yet. I am not sure if taking the loan back would throw Opel in to bankruptcy, but I am pretty sure it would. At that point, the unions would be having a real hard time negotiating.
Bottom line, workers are going to lose jobs. Magna was going to do it, GM will do it. Asking for the loan back may not be the best bet for Germany. I just have my popcorn ready for this one.
Brilliant management! Look at those fast and determined decisions!
Anyway, it doesn’t matter anymore. GM’s reputation in Europe (regarding management, not engineering) has been well below sea level for years and it will stay there.
I’m simply glad that I don’t have to do any business with GM and I’m really sorry for those who have to.
I know this is Europe, not Alabama or Mississippi and the worker’s rights issue will be paraded as a paramount issue, but when factories are not operating at a break even point something has to give eventually.
Understandably, the German politicians and IG Metall Union are miffed. On the day before yesterday, they thought everything was in order and the Germans would be directing the restructuring of Adam Opel. Now there is again disorder and that does not make for happy Deutschelanders.
I wish GM luck in this atmosphere of pay back.
The problem is that IG Metall better not make it too costly for GM or their jobs could go elsewhere.
GM could simply wind down the German Opel factories over time and replace that production with cars and truck made in other EU plants. Germany would not be able to do anything to stop that. GM has to hold on to Opel, but the German market itself isn’t very important. Once the German government give aways stop, the German market will be something like 2 million unit total per year. Opel is but one of a host of competitors for those units. So even if shutting down German production in response to a strike meant Opel lost some sales in Germany, it would probably be worth it.
I’m sure Opel’s factories in Spain, the UK, Belgium, Poland and Russia would be quite excited about ramping up to replace Opel Germany’s production output. Governments there might even lard on the incentive dollars to help with expansions. GM’s smart move would be to drive a wedge between Germany’s IG Metall union and the representatives at non-German factories. Just tell the other factories that GM has stopped the Magna deal which was going to favor German workers in order to support the rest of the European regional manufacturing base. Getting factory workers in the UK, Spain and Belgium on the company’s side in a fight with IG Metall shouldn’t be very hard.
It is not the factories that are important and what the fight is about. The fight centers around the design and R&D centers of Opel that are mostly in Germany.
ps. The non-German factories require supplies from German based Opel factories to build cars. If the Opel factories in Germany go on strike than the factories outside of Germany need to close too.
FRANKFURT -(Dow Jones)- German labor union IG Metall Wednesday said General Motors Co. isn’t in a position to restructure its German Adam Opel GmbH unit and fears the unit might become insolvent.
To ensure those crazy American bastards don’t make it, we’ll be going out on strike to uphold the dignity, respect, and honor of der Deutschland workers.
I looked at the calender but it was not April 1st.
It is hard to believe these bastards are doing this, The Deal was in the best interests of everyone, well everyone except maybe the German Taxpayers but 2.2 B is nothing compared to the shagging we got. Make the load 82.2 billion now/
I think GM has just shown to the last deaf and blind person on earth that they have completely lost their marbles. This is a very, obvious and clear insult to Germany as a whole. I think you will see the word nationalization crop up in german newspapers within three days. GM will be highly pissed then and highly screwed as they clearly deserve to be.
If they wanted to do anything more worse for their public relations in Europe they couldn’t have come up with anything more efficient than this.
This is an open insult. clear and simple.
Germany cant let this go without losing considerable face in the EU, something they surely cannot afford right now with their massive deficit. It’s hardball time!
I don’t think there is a legal framework for a quick nationalization in Germany, if GM pays back the bridge loan by the end of the month. If it doesn’t, it’s either nationalization or insolvency for Opel.
We’ll see. Pass the popcorn ….
Man, I’m shocked at how everyone here seems to take the side of the Germans. I was shocked at the beginning when GM said they would get rid of Opel. What the heck for?? They finally have a seriously good lineup, they sell well in Europe, and the technology developed can be shared around the rest of the world.
My reaction when I read it? Good. That’s the right move. Selling it to some parts maker would NOT have done anyone any good. Not GM, not Opel, not the workers, not Magna, not the engineers.
This is the right move. And I don’t understand why the Germans are getting their pants all up in a bunch over this.