The Wall Street Journal reports that GM is developing a plan B, should the European Union decide that the German government subsidies upon which the Opel deal depends are a violation of some rule or another. “[EU competition commissioner Neelie] Kroes pointed to ‘significant indications’ that Germany had made €4.5 billion ($6.72 billion) in state aid for Opel contingent on Magna winning the bid, therefore violating EU state aid and market rules.” GM now has a window of opportunity to reconsider the whole schmeer—as does the German government, Magna and their Russian sponsors. GM’s backup plan? Keep control of Opel and implement “deeper restructuring actions than Magna is planning . . . GM would fund the restructuring, which includes far more drastic headcount reductions, by soliciting government support or putting Opel into insolvency.” Which should be popular with about-to-strike Opel workers. Oh, and which government was that? Our government? No, of course not. Still, he/she who owns the gold . . .
If GM were to consider another plan for Opel, German Chancellor Angela Merkel could then find herself in the awkward position of financing an outcome that slashed far more Opel jobs in Germany and shuttered some of its plants. Ms. Merkel and her conservative allies are eager to preserve the Magna deal ahead of critical regional elections next May in North Rhine-Westphalia.
Magna has said that roughly 4,000 of the 10,500 Opel jobs it would have to cut across Europe would be in Germany, but it has indicated it wouldn’t shut any plants there. Government officials in the U.K., Spain and Belgium have raised objections, arguing German jobs would be protected at the expense of those in their countries.
See what happens when jobs are your number one product, rather than profitable vehicles? And this will change when? How? Where? Why? With what? Answers on a postcard, please.
This is (would be) the correct outcome, Opel needs GM, GM needs Opel and like GM before it Opel is still built like a company that “used” to dominate the market 30 years earlier, didn’t (couldn’t, those pesky unions) adjust and made up the difference by cost cutting the product with the resulting market loss (17% to 9%).
Somewhere, somehow, the world’s car manufacturing capacity has got be cut down.
If GM close Opel, you’d have to expect that any European aspirations GM may/might-have had will vanish.
VAG, BMW, Mercedes, PSA, Fiat will of course be delighted to assist.
(I don’t think they have a Ch11-like provision in Germany anymore do they?)
These people never get out of luck…
Hope they’re smart enough to make good use of it and keep Opel.
The shape things are taking means GM could end in the end like old Chrysler in the 70’s/80’s: sold all international assets/companies to save itself from C11, but ended like a local player.
And we all know how THAT went… see Chrysler now, PWNED and raped to hell, in the brink of C11-7.
If GM repeats those mistakes, then the only American manufacturer standing will be Ford, as Mr. Ghosn predicted some years ago.
For the record, I’d like to see all the D-3 surviving.
+1 Stingray. GM needs to have a strong European operation if it is to remain a player.
I have come to the conclusion that GM’s sale of Opel is basically just another version of Waiting for Godot…only longer.
Doubt if German Chancellor Merkel much cares now that the election is over and she won.
Carmakers are turning into tar babies for governments around the world. The government touches the tar baby once and then it cannot let it go. The tar baby causes more and more of a mess. We all suffer.
In the case of Opel, that will be Magna’s tar baby too. If I were Frank Stronach, I’d wake up and realize that buying Opel will take more from Magna than it will give.