By on February 8, 2010

This week, Opel will embark on a pan-European begging tour. Applications for government aid will be sent to Germany’s central government, Germany’s states with Opel plants, and to the European countries where Opel has a presence. A business plan, and an expert opinion from the little known CPA firm Warth & Klein will complete the package, writes Das Autohaus. Target of the funds drive are €2.7b. Opel management still counts on wage concessions of €265m per year over five years (a total of €1.3b). Unions and the Opel Works Council already have said “nein” to the concessions. Governments want to see the paperwork first,

If a country or a state gives money tied to keeping plants open, then the matter will be immediately shot down by the EU. Furthermore, Opel management must prove to the EU that in the medium term they can survive without the governmental drip feed. That’s a tall order. Hard to prove for Opel, and hard to imagine why anyone would donate to the cause unless the money secures jobs.

German media is already abuzz with an allegedly secret “Plan B” – which assumes that the funds drive will come in under target. In this case, be very afraid: Untold numbers of jobs would be axed, and wholesale closures of plants could ensue.

The unions are unimpressed by the posturing. They doubt that GM has the money to go it alone. Labor leader Klaus Franz warns GM to be careful with the what ifs: “It could easily be construed as blackmail.”

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9 Comments on “Opel Will Go Begging Again...”


  • avatar
    Lorenzo

    I’m surprised the German press actually believes Ed Whitacre even HAS a “plan B”. It looked to me like somebody told Big Ed how important Opel’s IP is to GM, and he made the snap decision to keep Opel with no thought given to its future.

    From what I can gather, any “plan B” should involve selling Opel’s IP and its most efficient, low cost plants to GM Europe, and letting the rest of Opel go bankrupt. That would be unwise while they’re asking for government financing, but doing it after the financing plan fails would look like a strip-and-dump operation.

    Big Ed’s history at SBC/AT&T shows he never employed a plan B. His operation always bulled Plan A through the Federal utility regulation process, steam rolling state and local governments and their regulatory agencies along the way. His treatment of Chancellor Merkel seems to indicate he holds the nations of Europe in the same regard as states and local governments.

    • 0 avatar
      rnc

      I think that was the main reason for pulling out of the arranged sale. Not to keep opel alive and part of GM, but to keep anyone else from having it. Better to start over with chevy (already has a foot hold), then to start over with chevy and a competitor who has all of your technology and platforms. Close Opel and focus on eastern europe (growth market) and then slowly re-enter western europe. And maybe just maybe before it gets to that point, the governments and unions will realize that’s where it heading and give the concessions needed, this is a game of chicken were GM is probably better off whether it wins or loses.

  • avatar

    I -and many with me – agree that bankruptcy would be the best way. Without it, funding the “social plan” involved with letting some 10,000 workers go eats up all the money. Even the unions say that.

    I guess that the presumptive “donors” are just as worried about a bankruptcy after they have given – which might keep them from giving.

  • avatar
    NickR

    I am just trying to get this straight…who is the organ grinder, who is the monkey, and who is the nun?

    • 0 avatar
      KGrGunMan

      the monkey is opel, because it’s dead and stuffed.

      the nun is the EU governments because thats who reaching into the purse.

      the organ grinder is GM because he has his hand up the monkeys backside and is collecting the money.

  • avatar
    Hippo

    BK is best.

    GM is fishing for Euro .gov money to keep the design dept they need badly as it would just leave them with entry level Korea designed cars.

  • avatar
    tparkit

    This is actually Washington going begging/coercing, which means that the true discussions are government-to-government.

    This part is hilarious:
    “The unions are unimpressed by the posturing. They doubt that GM has the money to go it alone. Labor leader Klaus Franz warns GM to be careful with the what ifs: ‘It could easily be construed as blackmail.’”

    No party is playing hardball harder than the unions. Together with their partners in the European governments, they intend to force Government Motors to fork over US taxpayer cash. They believe that Washington will find it politically expedient to spend its way out of being tarred with the visible failure of closing down Opel.

  • avatar
    Steven02

    I don’t understand the union’s position. They don’t think GM/Opel can go it alone, so they don’t want to make concessions?

    My guess, if the money isn’t going to come from the gov’ts of Europe, Opel dies. First, GM “buys” all of the intellectual property and tooling. Then, Opel is divested and goes into bankruptcy shortly after. That is how I would do it.

    I guess govts of Europe are ready to see Opel gone.

    • 0 avatar
      Hippo

      Most unions in Europe are legitimate and look at what is good for workers and the big picture.

      They are not gangster cartels like some unions in the US.

      They are well aware of overcapacity and realize that every job saved at Opel will cost a German job at another auto maker.

      No point in spending tax money on it.


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