By on May 29, 2009

Today, Berlin will re-attempt to save Opel after the disastrous Wednesday night / Thursday morning confab. From most accounts, that meeting was a remake of The Three Stooges, with the actors sent by central casting in Washington and Detroit. Berlin is still fuming about the “impertinence” (finance Minister Peer Steinbrück) of the junior Treasury staffer who demanded an extra $415 million more in short-term cash, above the bridge financing of $2.1 billion Berlin had been ready to sign that night. They also are still grumpy about being lied to, or handed “information with a short half-life” as the finance minister put it ever so politely.

Still smarting from the public flogging the German ministers administered after the meeting, GM is in heavy backpedaling mode. It’s all a big misunderstanding, GM CEO Fritz Henderson told Bloomberg. Fritz should have gotten his derriere over to Berlin in the first place, preferably with PTFOA member Ron Bloom alongside.

When the Germans found out during Wednesday night that the Treasury staffer was absolutely useless, they established a quick videoconference with Bloom, desperate for someone who makes at least a bit of sense. To be sure, Germany’s SecState Steinmeier called his colleague Hillary Clinton for help. For what it’s worth, Hillary offered her “utmost support.”

Back to Henderson: Fritz says GM didn’t ask for additional funding for its Opel unit from the German government. Das ist ein Mißverständnis. GM’s request for a $2.1 billion bridge loan remains unchanged. GM just needs the money a bit faster: $630 million upfront. The German government had thought the immediate needs were $140 million, Fritz explained. “Any confusion that was caused by this we take responsibility for,” Henderson says with as much contrition he can muster.

That will go down just swimmingly in Berlin. They were already confused that night in Berlin, because numbers kept changing; some doubted whether the US delegation knew the difference between dollars and euros. Now, it’s $630 million instead of the $415 million that made the Germans hurl carefully crafted invectives westward ho. Everybody: On your knees and pray that nobody reads Bloomberg in Berlin.

Henderson tells the sob story that all GM is doing is try to “protect its European operations, including Germany-based Opel, before a US government-imposed June 1 deadline to restructure or file for bankruptcy.” We’ll see tonight how much sympathy he will get for that one.

One participant of the Wednesday meeting already picked up his ball and went home, to Torino. Fiat’s Sergio Marchionne said he will not make any more concessions, and he will not take part in the second round of meetings tonight, and he did not get full disclosure of the Opel books, and he’s not willing to take on any additional risks. Arrivederla, signora e signori! The other part of the truth is that someone on the inside had leaked that “Fiat is out,” as Der Spiegel reports.

Magna is just about to get up and leave also: Since 6 a.m. (local), Magna has been negotiating with Forster et al. in the Berlin Hotel Adlon, right across from the Brandenburger Tor. Forster must not have talked to the contrite Henderson. The meeting isn’t going anywhere.

Not having learned anything from Wednesday night, GM “is constantly making new demands” BILD Zeitung was told. Yesterday, Magna was ready to help with the $415 million bone of contention. Now they are mad as hell, and are close to saying “Jetzt reicht’s” (Enough is enough.). “They are ready to get up and leave,” BILD reports.

With the negotiations in increasing disarray, a bankruptcy of Opel gets ever more likely. The Frankfurter Allgemeine Zeitung reports that Opel has hired insolvency expert Jobst Wellensiek, along with the Clifford Chance lawfirm, which is working on a bankruptcy package to file with the court. Even chancellor Angela Merkel, who so far had taken the presidential high road, now doesn’t want to rule out an Opel bankruptcy, reports Der Spiegel.

It may be the cheaper solution all around. Germany’s economy department calculated that a shuttered Opel would cost the government €1.1 billion—assuming that all 25,000 workers will remain unemployed and find no new jobs (a nuclear winter scenario). Total government costs for an alive Opel: €4.5 billion under the Magna model, €6 billion if Fiat gets it. Germany’s other car manufacturers would be glad to take up the slack.

GM and Magna have until 2p.m. GMT to agree or disagree on a deal. If they agree, the German government will probably accept the deal without much fuss, says the FAZ. If there’s no deal, then the meeting tonight will be short. The bankruptcy of Opel shall be blamed on the ugly Americans, and Germany will go back to more important things. Who will win the fall elections?

Don’t touch that dial . . .

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19 Comments on “Editorial: Opel Watch: Henderson: “We Are a Victim of Coicumstance!” Fiat: “Andiamo!” Magna: “Jetzt reicht’s!”...”


  • avatar
    KatiePuckrik

    And you thought GM’s NA operations were a clusterNSFW?!

    Personally, I hope it all goes belly up. I hope no buyer is found in Europe and GM file for bankruptcy in the United States. Why?

    Because I’m bored. Since the banking crisis has subsided and the UK’s economy is gaining strength (yes, you read that right), I’m getting bored. A massacre in the auto industry is just what I need. Naturally, I’ll feel for rank and filers who lose their job, no-one wants that, but GM’s management must be held accountable, no-one can disagree with that, surely?

    Back to Europe. If shuttering Opel/Vauxhall is the cheaper option (and I’m still not sold on the idea), then, why don’t our German brothers and sisters do that? What’s it going to cost them? 100,000 votes at the most? In an electorate of 40 million (roughly and that’s a conservative estimate), that’s got to be minor.

    In the long term, it’ll be better for the economy. It’ll free up market share for Germany’s stronger makers (mainly VW) and the rest of Europe to pick up.

    Too many resources have been thrown at this issue. I wish it was a simple procedure for someone to buy Vauxhall/Opel, save all those jobs and carry on. But it isn’t. And if it costs more money to keep Opel alive, than to close it, then you have to ask yourself:

    What’s the point of this exercise?

  • avatar
    Juniper

    If all the Germans have to offer is insults and arrogance screw it. Shut Opel down. Of course they may get another 50000 person riot in Berlin and add to the high poverty rate in Germany. But as long as they can drive their Benzes at 200 kph on the Autoban all is well.

  • avatar

    Currently, it doesn’t cost them any votes, because they can blame it on the Amerikaner. The warring CDU and SPD, which currently sit in the same government, which comes up for election in fall, are in deep agreement about that. Never make two fighting dogs mad at you, they may just turn around and bite YOU.

  • avatar
    Morea

    the junior Treasury staffer

    How come we never get the name of this person or a description of their position? Are they career or political? What are their qualifications to be engaged in these negotiations?

  • avatar
    OldandSlow

    First, Fritz Henderson is tending to a much greater avalanche on this side of the Atlantic. So, I doubt that he’ll be traveling to Deutschland any time soon.

    Second, a major component of GM’s and much of corporate America’s business model is broken – which is their accounting. Due to tax laws, cooking the books for Wall Street and keeping their real costs of doing business a mystery to labor, their accounting procedures are at best obtuse. I’d bet donuts to 10 dollar bills that not even Fritz Henderson has real numbers at his disposal.

    I’m sure that German politicians are well aware that a guarantee of public financing to keep Adam Opel in business won’t be the beginning of the end or the end of the beginning for that matter. Plus, there are a great number of other German businesses in the same boat, i.e. they are in need of bridge loans to get them through the Great Recession. American companies weren’t alone in depending on cheap credit. Just ask Porsche.

    The question that remains is will the Christian Democrats play a Margaret Thatcher card or an Obama role during the great unwinding?

  • avatar

    Juniper: The operative word is not “arrogance,” it is “contempt.” Stupidity breeds contempt.

    As for the poverty rate: If you want to be poor, then I recommend doing it in Germany. It’s not worth making less than $3K a month while working. Welfare is the better and less stressful option.

    200 kph in a Benz? Puhleeze, move over.

    Morea: The staffer’s identity is a well-kept secret. Probably better that way.

    OldAndSlow: As for the obtuse accounting procedures, there are persistent rumors that they may not hold up to intense scrutiny by the German tax authorities. The “patents” caper is a classic tax avoidance scheme. For everybody’s edification, in Germany, bankruptcy always involves some sort of criminal investigation, simply because more often than not there are obtuse accounting procedures before a filing. As everybody from Chicago should recall, Al Capone was convicted on income tax evasion. I wouldn’t insult a whole government if I had a collection of skeletons in my basement.

  • avatar
    kaleun

    I think the US government can learn a lot from the German government. not that htye are perfect, but at least they negotiate BEFORE they give them any loans (if any). The Bush/Obama team gave them money and then started negotiating (about how much more will be wasted). Go figure! At least the Germans demand a kind of concept from the people that want the “loans”.

    Let them die, GM, Chrysler, Opel… if their technology is worth anything, VW, Toyota will buy it. If their employees are any good, VW/Toyota will hire them for their increased production. In case the employees are worthless (whiny UAW???) they don’t deserve a well paying job anyway.. i assume the R&D employees and patents will find a buyer if they are promising. So there is no loss to society.

    I would just tell GM/Opel: “you need my billions by tomorrow and I’m the only one who would give you any money, so you are in no position to demand anything. comply or die.”. that’s how it should work.

  • avatar
    Juniper

    Bertel
    Thankyou, now I know more about arrogance and I have more contempt.

  • avatar
    OldandSlow

    http://www.ft.com/cms/s/0/f82580d4-4c2e-11de-a6c5-00144feabdc0.html

    It looks like GM throwing in a last minute 630 million dollar poison pill worked. FIAT is checking out.

    I wonder if Marchionne would have stuck with the Chrysler deal if the US government had insisted on a half billion dollar earnest payment. The Jeep brand alone would have been worth that much.

  • avatar
    tsofting

    Bertel, just a linguistic nitpickery question; As “Jetzt reichts”, is a contraction of Jetzt reicht es, shouldn’t you have an apostrophe between reicht and s, – “jetzt reicht’s”?

    Now, I know revisions have been made to the spelling of German, so maybe my command of the language is lagging behind the times…

  • avatar
    rpol35

    “I’m trying to think but nuthin’s happenin\'”

  • avatar
    GS650G

    Opel is in a similar situation many laid off workers find themselves with no leverage and few options. It’s a race to the bottom with few advocates for the target.

    At the end of this month the bottom is falling out of GM. Opel will be another casualty of that.

  • avatar

    Tsofting: Your command of the Teutonic language isn’t lagging at all. Actually, it’s one of the finer points of German orthography. Corrected.

  • avatar
    Rod Panhard

    1. Fiat is playing liar’s poker. They know that even though they’re putting nothing in the game, they’re still the “devil we know” rather than the “devil we don’t know.”

    2. “Disorder in the Court” remains one of the finer Stooge films. In an odd way, Curly shows he’s smarter than everyone else. Much smarter. And in this case, Marchionne might be playing Curly.

  • avatar
    fincar1

    “How come we never get the name of this person or a description of their position? Are they career or political? What are their qualifications to be engaged in these negotiations?”

    What matters here, I think, is that a junior staffer was sent rather than someone higher up in the organization who had some ability to make decisions. Consider the 0bama administration’s general treatment of allies of the U. S., and you’ll see what I’m getting at.

  • avatar
    jerseydevil

    I didnt read your no doubt inspired editorial yet, I just wanted to thank you for the Three Stooges clip. I forgot how much I enjoy them!.

  • avatar
    Smegley

    The business world was a much better place when the German Parliament was primarily concerned with the Rechtschreibgesetz and the US Congress was debating gallons per flush. These are issues in which politicians have at least minimal competency. They haven’t a clue about business.

  • avatar

    Kind of sad but not surprising GM seems to be trying the same crap on Berlin they’re doing here. “Wait; did we say 10 Billion? -Well, that was before we found out, just now, that we’ll need another 190 Billion. And probably after that, but not really sure, maybe; -another 50 Billion; and a 5-dollar foot long from Subway; everything on it.”

    –Can’t we just have Jason Bourne assasinate Henderson, the unnamed staffer & the other offending parties in room 645 of the Hotel Brecker?

  • avatar
    shaker

    Prosecutor: “…and drop the vernacular.”
    Curley: “That’s not a vernacular, that’s a DOYBEE!”.

    Oh, thank you!


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