To stay alive, Opel wants to scale down. The factory in Antwerp is being closed. With amazing results for Opel’s bottom line: Closing the factory costs GM around €400m ($532m) in termination benefits. GM and the unions reached an agreement on the termination benefits earlier this week, reports Reuters. There are 2,600 workers in Antwerp. Now do the math: $532m divvied up amongst 2600 workers is a little bit over $200,000 per worker. Ouch! Wait, there is more pain …
GM is just finding out the hard way how expensive it is to downscale in Europe unless you declare bankruptcy. The people who warned that most of the government money GM wanted to collect (but hasn’t received) will be used up for termination benefits are proven right. If the above sets a benchmark, letting go of roughly 10,000 workers will cost a cool $2b.
In the additional pain department, GM paid off Russia’s Sperbank. Sperbank and Magna wanted to buy Opel, all deals were done until GM suddenly had a change of mind. Sberbank threatened to sue. Sbebank is close to the Russian government. GM wants to do business in Russia. According to Der Spiegel, there has been a settlement. How much GM transferred to Sperbank is confidential, but rest assured that a good chunk of tax payer’s money just went to Russia.
All quiet in Berlin about propping up Opel with government money. Berlin signaled in March that there will be no decision until May. “Uh-oh” says the observer who knows German politics. There is an election in North Rhine-Westphalia in early May. North Rhine-Westphalia is home to Opel’s Bochum plant, and with the elections gone, gone will be the last reason to spend any German tax payer money. “Opel” is conspicuously absent in the campaign. And Germany needs every penny to bail out Greece. It will cost around €140b, with Germany backing the lion’s share. Opel? We’ve got other problems.
So maybe they gave the government its money back a little to soon? Looks like they may need it sooner rather than later.
The US govt. gave GM roughly $56B in cash – $16.4B was put into escrow with strict rules governing how it could be spent.
In return for increasing GM’s cash equity by $56B, the US govt. received 61% equity in GM and GM had to repay a $7B loan to the US govt.
The escrow was used on Delphi ($2.8B) and loan repayment ($7B).
With the loan repaid, the remaining $6.6B in the escrow is now available to be used without restriction by GM (Opel restructering comes to mind).
Thanks, I hadn’t noticed that in all the stories this week , Captain Obvious.
GM is one sick puppy.
“…$16.4B was put into escrow with strict rules governing how it could be spent.”