When GM’s Fritz Henderson called Magna chief Siegfried Wolf and told him that GM had an irreversible case of seller’s remorse, Wolf’s flabbergasted counter was: “Are you joking?” Fritz told him he’s dead serious. Opel will stay with GM. Now, all Wolf has left for GM is unsolicited advice: Give more freedom to Opel and tread carefully with the brand and the unions. “GM must now smooth things out and win back trust. That requires a lot of sensitivity and tact,” Wolf told the German newspaper Bild am Sonntag (via Reuters).
It doesn’t look like GM will be heeding the advice. New Opel Chairman Bob Lutz and new GM-E chief Nick Reilly are known for the sensitivity and tact of a Sherman tank. Supposedly, both are here on a temporary basis only until new outside managers are found. It could be a long search, if it is a real one at all.
On Monday, Fitz Henderson will come to Germany and try to smooth over things with the workers, Opel’s worker’s council chief Klaus Franz told German media. It will be a tough talk.
“GM does not enjoy any credibility or faith in the eyes of the public or the (German) government, so they have to consider whether they now want to seek confrontation or cooperation by finding a common solution,” Franz told Reuters . “To see whether they are interested in cooperation, we need to know whether they are willing to start off where we last stopped — namely, the degree of autonomy and freedom that was set in the contract with Magna and accepted by General Motors.”
If that is a clear condition for any talks, as Franz said, then it will be a short discussion. True to form, Bob Lutz announced in the Swiss newspaper Sonntag that Opel will need to slash fixed costs at Opel by a third: “The restructuring plan developed at the end of last year is still the basis for a profitable business model. The plan foresees a 30 percent cut in structural costs.” Sounds like confrontation.
In the meantime, Germany is on a witch-hunt. Who was the fool that allowed GM to back out of the deal? According to Der Spiegel, it was Germany’s economy minister Karl-Theodor von und zu Guttenberg. Remember the big chain-letter brouhaha, started by EU competition commissar Neelie Kroes? As reported, Guttenberg had sent a letter to Henderson on 10/17/2009, asking for confirmation that there was no political pressure to do the Magna deal. Industry commissar Günther Verheugen had warned Guttenberg: Don’t write that letter, at simple declaration that there was no pressure would suffice. If the letter would be written, GM could revisit the decision to sell to Magna.
Guttenberg, who never had been enthusiastic to do the deal, wrote the letter nonetheless. He even added that government money would be available, “regardless of the identity of the investor.” This gave the GM BOD reasons to believe that Germany would hand them the money if GM itself would keep Opel. It wasn’t a coincidence that Henderson said the restructuring of Opel would cost €3B — exactly the amount Berlin was ready to drop on Magna, in addition to the exiting €1.5B bridge loan. Guttenberg is unconcerned. After the letter was out, von und zu received the defense ministry portfolio. He is in command of the German army now. If someone plays funny games, he’ll be looking into the Rheinstahl gun of a Leopard tank.
GM is trying to entice other countries for donations to the cause. However, any government money will not pass Brussel’s scrutiny if it comes with the conditions that plants will be kept open and workers won’t be fired. That, however, would be the only reason for any government spending any money. Financial help will also clash with public opinion. According to the latest polls, 70 percent of Germany are against subsidies for Opel. Martin Winterkorn, CEO of VW, agrees. With Opel gone, Volkswagen could sell 300,000 cars more.
With the unions set for war, with the EU and the population dead-set against financial life support, GM will have a rough road ahead. Stay tuned for more episodes of the never ending story.
By the way: German magazine Focus reports that GME chief Carl-Peter Forster, who handed in his resignation after attacking the board’s decision, has found a new job. He is now slated to take over as head of Indian group Tata Motors’ Jaguar Land Rover.