Friday the 13th was a bad day for GM Europe, and by extension Opel, Vauxhall, and Saab. Ministers of eleven European countries where GM has a presence met in Brussels to decide what to do about the ailing American automaker’s foreign empire. First, they listened to reports by Frederick “Fritz” Henderson, COO of GM, and Carl-Peter Forster, CEO of GM Europe. Then, they decided to do nothing. Even more disconcerting for GM, the ministers decided that no country should do anything to bailout GM unilaterally. “There will be no rescue measures on a national level without prior European coordination,” reports Automobilwoche [sub]. And as if this wasn’t bad enough . . .
Even more ominously, Industry Commissar, Günter Verheugen, and Competition Commissar, Neelie Kroes, insisted that any possible help for any GM-subsidiaries go strictly by the (European) book; the competitive landscape in Europe may not be impaired by help for individual companies.
Sweden’s state secretary in the ministry of enterprises, Joran Hagglund, told reporters after the meeting that officials agreed that sticking to EU rules was paramount, Reuters reports.
“We have to uphold state regulations, not shove taxpayers’ money into companies that are not viable on their own,” Hagglund said.
GM has production in Belgium, Britain, Germany, Poland, Spain and Sweden, with other countries home to suppliers.
GM is currently trying to raise €3.3B in aid. If nothing can be done “without prior European coordination,” there is strong doubt that anything ever will be done. Even amongst the willing, European coordination is a long, drawn-out process. It looks more and more like there is no will to save Opel, and, if anybody asks, Brussels can be blamed. The European countries effectively tied their own hands. As for the chances of ever reaching consensus, listen to what Belgian Economy Minister Vincent van Quickenborne had to say:
“Belgium doesn’t agree with countries taking measures that are only in favor of themselves or different parts of the company in other European countries.” Mind you, this comes from a county where GM has a plant in Antwerp.
In the meantime, Saab and Opel dealers are watching their bank accounts closely. On March 15, the annual incentive and bonus payments for 2008 are due from Saab. Since it’s a Sunday, a lot of Saab dealers will call their banks on Monday afternoon and inquire about incoming funds. Opel dealers are expecting incentive payments on March 20, many of them are due millions. “Suspense is high,” says the German dealer rag Autohaus.
Tied their own hands? It’s common business sense. They are waiting for a viable business plan from GM. Unless GM shows by action or inaction that there’s no money in the european branches, why should European taxpayers pay for GM:s lack of management? I think it’s obvious that Europe doesn’t count GM as a going concern anymore. Even with unrestrained help, GM wouldn’t make it in a million years. GM is toast…
The Presidential Task Force should take note. GM is in a free fall and the EU (wisely, IMO) refused to take up a net.
Rewind to the 1970s, British Leyland is burning cash just as fast as GM is today (in relative terms) and suddenly Chrysler demands an injection of cash and threatens to close plants it owns in Europe.
They got their cash, and then closed or dumped the plants anyway.
I’m glad to see that the governments are being more cautious – burned once, more careful the second time round.
Why does the cynic in me think that the European governments would like GM Europe to go under as this would take all the pressure of the falling market of the indigenous European makers. There by removing the necessity of propping the indigenous car companies.
The government can also blame an “incompetent” foreign company for the job losses.
Indigenous european makers? Like US-owned Volvo and Ford? Indian-owned Jaguar and Land-Rover? Malaysian-owned Lotus? Privately-owned BMW, Government-controlled Renault-Nissan and publicly owned Fiat? yeah, Im’ sure it’s all just a big conspiracy….
It’s not a conspiracy, just many actors acting in their perceived best interest. If it were one of their companies, they would turn stupid and start writing checks.
Yes I agree with Landcrusher. To add to that thought.. the longer the EU waits the better the deal EU will get on Opel.
I think EU may want it all. For EU tax payers, why not get maximum value for any bailout? What at this point would stop the EU from not just holding out for Opel… but also taking full ownership of all patents, all platforms, and all technology?
(Will a future GM have to pay royalties to Opel for every Buick or Chevy that rolls of the line in the US?)
Scraping what they can from GM in the name of taking Opel back does not hurt any domestic EU interests. As a result it seems that the EU may lack any sort of reasonable restraint in their dealings with GM.
Without some behind the scenes foreign policy help from the US Government, will GM simply be plundered by EU politicians?
-Mc
I am amused (and confused) to no end that on the face of it; Socialist Europe is sticking to free market principals while the US can’t throw enough money at their “National Champions”.
What’s next in this mixed up world – Engineers dating supermodels? I keep hoping!
I don’t think most of the European governments are sticking to free market principles as much as they are doing what they perceive to be in their best interest.
Perhaps, however, we will see a bit less name calling in the US wherein various politicians scream at any opportunity that we dare not “turn the US into Europe”. That sort of we-have-nothing-to-learn-from-anyone attitude gets the US in all sorts of trouble.
Mc: Get real…
They are simply putting an end to GM:s blatant blackmail and extortion scheme. If GM had a viable business plan, they would get their money, as Volvo did from the EIB. No business plan – No money. At the end of the day, it all comes down to GM not being reckoned with anymore.
@MikeInCanada
Do you really know what socialism is ?
Europe isn’t socialist, most of the political parties firmly adhere to liberalism. Europe as a political entity was build on free market and free enterprise.
Ingvar – I think you’re 100% right regarding the lack of a viable plan. The other evidence confirming that is the speculation about interest in Volvo from the usual suspects and the complete lack of interest by anyone in an equity stake in GME.
I agree w/ those above who’ve said that this is being done ’cause there’s no member state to back GM. And as GM fails and disappears you’d have some scraps left over for Euopean companies like VW and group, PSA, Renault, Fiat and even Ford (not to mention assorted Asians) that would gain market share and sales.
Yes you can look at the Chrysler story and put out grandiose words supporting “free” markets and capitalism, but remeber, the Europeans are masters at hiding behind words, or giving them just enough of a twist that they can mean anything, which is to say, nothing. Unfortunately, this is a behavior Americans normally cannot understand.