GM’s new European Viceroy, Nick Reilly, surprised and astonished the participants of a Saturday conference call by saying that German aid, or no German aid to Opel, “it won’t make any difference to our restructuring plan, so it will not lead to more layoffs in Germany or less layoffs.”
Now what’s that all about? Wasn’t the line before “you either pay us, or you pay unemployment benefits, anyway, you’ll pay?”
The most likely explanation is that GM has received, through Briton Reilly, some European religion. EU regulations strictly forbid any money-for-jobs, or money-for-keeping-plants-in-the-country deals. At least not officially. As very recent history shows, this hasn’t filtered down to all levels in Europe. Reilly at least seems to get it.
He hasn’t given up the hope for state aid, actually, he’s banking on it. “I am very optimistic that all our countries will come forward with some sort of assistance,” Reilly, said, as reported by Reuters. He even mused that a refusal by Berlin was more hypothetical than anything. However, under Reilly, the vision thing is that tax money will flow to GM in an EU regulation compliant kindof way.
“We are working closely with the EU competition commission to make sure that any application for aid is not going to have a problem,” Reilly said.
So instead of money on the table, it’s money under the table. Sounds like Reilly is connecting with reality. As unappetizing reality may be.
I wonder what the long term effects of all this will be on other US businesses. I have to imagine countries aren’t going to be lining up for this sort of treatment.
The concept of making government aid in whatever form somewhat difficult to qualify for and obtain seems to be a refreshing concept, don’t you think?
Those of you who enjoy yelling “socialism” at every opportunity should pay attention to what our state and city governments are doing in the US.
What outsiders call Phoenix, AZ those of us who live here realize is a collection of about 20 cities that have grown together and the competition between these cities for new businesses is fierce. In the past few years Scottsdale and Phoenix stumbled all over themselves to give up property tax money to attract car dealerships and malls.
Will these someday turn out to have been good “investments” or just lost immediate revenue and empty storefronts only time will tell. But we taxpayers are going along for the subsidies to the speculators investments whether we like it or not.
Oh, since we are not collecting property taxes from these businesses our sales taxes go up to make up the difference.
Never underestimate the contempt any government or large business has for the people.
I’m impressed with Nick Reilly. Through all this recent Opel problem, the man has never wavered in the message he’s sent out. Remember, it was both he and Fritz who contradicted Whitacre’s “We’ll fund Opel ourselves” statement. Fritz is gone, Reilly is still there and in charge of GM Europe, including the management of Chevrolet there.
A reading of the various reports on Reilly’s latest statements today reveals that GME is most definitely still looking at state aid to restructure Opel. Only Germany is playing coy, and Reilly has spent time sweet-talking the EU competition bureau.
If he manages to pull this all off in Europe, and manages to keep Whitacre from making spontaneous outbursts on the situation at Opel, this is your new GM CEO after Whitacre has done the necessary “dirty work” at GM Central Casting.
My reasoning relies on the stellar career Reilly has had in the last 30 years at GM. A GM lifer, sure, but the winner of a few awards as well. Been in manufacturing, marketing, England, Korea, China, etc., and advisor to the UK governement on vocational training. He would have another job in a minute if turfed out by the GM Board.
So I don’t think Whitacre’s bluster gives Reilly a moment’s unease, other than the occasional “Oh god! What’s he saying now!” He just gets on with the job, including changing Opel over to a GmBH from an AG (which Fritz did not want), but which has changed the tune of the Opel worker’s union overnight.
A year, 18 months, and there’s your new CEO if he continues his successful ways. My prediction for sanity at GM, anyway. Let’s hope wise heads prevail.
Can you enlighten us on the differences between a GmBH and an AG and how that effects the worker’s union? I am completely uninformed on those nuances.
I can give you a rough idea.
GmBH – is a limited liability company. The origin point for the LLC in the US.
AG- is a publicly traded company. BMW is an AG.
I don’t know that the corporate structure would have any effect on union activity, but I’m not a German lawyer.
porschespeed is right.
Right now, Opel is a GmbH, but Opel wants to become an AG. The point is that Opel now hates GM with a passion. For them it was the bad decisions made in Detroit that lead to the desperate situation they’re in now. On top of that, GM’s decision to keep Opel after agreeing to sell to Magna has caused further rejection.
As an AG, Opel would be a completely separate company and the people at Opel hope that this would also give them more freedoms and protect them from further mismanagement by GM.
It seems that Opel is already officially Adam Opel AG and that the question is about moving towards being a GmBH, not the other way around.
http://www.britannica.com/EBchecked/topic/429578/Opel-AG
BTW, I suspect that not all of Opel’s problems came from the head office in Detroit, but that the locals have convinced themselves of it anyway. People are always more comfortable blaming someone else for their troubles than they are looking at where they are indeed part of the problem themselves.
Expanding on what Tom said, many Europeans consider the english and by extension Reilly Europeans in name only and joined by the hip to the US.
Most definitely not sitting on the same side of the table.
1.) Opel is a GmbH. Horner’s Britannica is outdated. Opel was changed from a AG to a GmbH, for reasons we will soon comprehend, but possibly not understand.
2.) Correct, a GmbH is more akin to a lowly LLC. A big company like Opel should be an AG
3.) There used to be a huge difference between a GmbH and an AG, these differences have narrowed. The main difference is shareholder control. In a GmbH, management works at the pleasure of the shareholders and must obey directions given by the shareholders. In an AG, the management board is relatively independent. It reports to the Supervisory board, but the supervisory board can only approve or disapprove motions by the management board. The Supervisory board cannot directly direct operational matters. The only way to deal with a recaltrticant management board is to fire it. Which is not easy. In a company of Opel’s size, 50% of the Supervisory Board sets will be held by labor. The Chairman vote can be a tie breaker if there is a tie. If Opel would be an AG, it would be much more independent from the mothership. Right now, Opel GmbH is a glorified subsidiary of GM, where GM can direct whether the toilet paper should be two ply or three ply.
Bertel,
Thanks for the detail, always nice to have a native around to clarify.
There’s only one thing better for the workers than being an AG, and that’s being an AG with a 20% stake held by the State of Lower Saxony. I’m wondering if Reilly’s being a Brit is the perfect compromise in this situation – a hybrid European/ Trans-Atlantic Axis exec? As long as he can keep the garrelous Texan quiet, he should be able to make progress.
Yup, I got the AG versus GmbH completely backwards in my post yesterday. Blame it on my long term memory of seeing Adam Opel AG in my mind’s eye. (couldn’t correct my error yesterday as no sooner had I hit the submit button, then off went our electricity, courtesy of a winter storm – for hours and hours, then it was time to dig out)
Interesting that today, Bloomberg is also touting Reilly as possibly the next GM CEO. I guess the idea is too obvious, so it probably won’t happen!
Folkdancer said:
“Oh, since we are not collecting property taxes from these businesses our sales taxes go up to make up the difference.”
But I must ask, why do we always seem to first think that it’s imperative to “make up the difference?” That phrase betrays the thinking that spending is inviolate and you can’t touch it no matter what else is happening in the world.
If we simply can’t afford prior spending levels due to the economy or for any other reason (world events, economic emergency, etcetera), then shouldn’t we be thinking of tightening our (governmental) belts rather than trying to find new ways to squeeze it out of the few remaining taxpayers there are?
It’s not government’s money. Thinking and acting like it is; well that IS socialist thinking.