This Time It's Serious: Berlin Says Nein Again To Opel Aid
We knew it would be one of Angela’s feel good meetings. Careful parsing of her statement yesterday gave the clues: “I will do everything so that the employees who were pushing for the preservation of Opel receive all possible help and support we have at our disposal.” Angela hadn’t promised help for Opel. She promised to do what she can to cushion the blow to the Opel workers. Anyway, Frau Merkel met with the Premiers of the Opel states, only to tell them that the decision stands:
No help for Opel from Berlin.
“There was no breakthrough at the meeting of the Premiers of the Opel states with German Chancellor Angela Merkel,” reports DDP via Ad Hoc News. The ladies and gentlemen left the meeting “disappointed.” Hopes to find alternatives to help Opel were quickly squashed. “There was no movement at all,” complained Kurt Beck, Chief of Rhineland Palatinate, where 2300 workers have Opel jobs in Kaiserslautern.
Angela gave the states a pat on the head and the advice to help Opel out of their own pockets, if they insist. They’ll probably make some empty gestures. And then nothing will happen. Without help from Berlin, any help from the states would be wasted money.
Just listen to their comments.
Thuringia is all for help by the states, said Premier Christine Lieberknecht. Easy for her to say: Thuringia offered only €27.3m
Kurt Beck of Rhineland Palatinate warned against “creating false illusions.”
Jürgen Rüttgers of Northrhein-Westphalia said that states “are available for talks with Opel.”
Roland Koch, Chief of Hesse, where Opel has its headquarters and most of the jobs, warned against a race between the states. Opel should approach the states first.
It’s not going to happen.
Opel needs much more than the €1.1b it wanted from Germany and did not get. They wanted to collect a total of €1.8b in Europe. Any offers of cash so far came with the usual caveat: We’ll give if Berlin pays the lion’s share.
With Berlin away from the poker table, it gets increasingly silly for anybody else to sink money into moribund Opel.
The less money Opel gets, the more plants they have to close. The more plants they close, the more money they need. As long as Opel survives, letting people go will bankrupt the company (Antwerp did cost $200k a head.) The only way around being bankrupted by severance payments: Bankruptcy.
Taking Opel bankrupt and continue is tricky. There will be no bad Opel and good Opel. Wages are first in line, and a hostile government can give Opel a lot of grief, especially with a solvent parent.
Anybody believe in miracle? If not, let’s cue the appropriate music. We’ll play a different tune when Whitacre finds some money he said he was not allowed to spend.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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Wasn't the thinking behind the cancellation of the sale to Magna that Opels expertise with small/medium cars was critical to GM? If that's the case the Germany can reasonably expect GM to rescue Opel, at least the German part of it where the engineering expertise resides. And if that means that Opel Spain, Poland and Vauxhall UK have to go, bye bye.
The trick will be to move appropriate production to the UK, then pull the plug on the Opel AG (or whatever the legal name is). Vauxhall can then hire appropriate engineering expertise - gasp! - and put Britons to work. Or since they are all Europeans now, the Germans with engineering expertise AND seniority can move to the UK and work at Vauxhall for a pay-cut (since after all, living standards are lower in the UK than in Germany). Alternately, GM could simply actually (gasp! what a novel frickin' idea) engineer American cars for America in America! Seriously, Opel is DEAD and has been a zombie for some while. GM should have GIVEN it away when they could. It's like a millstone around their neck. Plus, as mentioned, they cannot LEGALLY spend monies received from the US government (printed up nice and fresh as new debt for 310 million American subjects, no longer citizens). Also quite seriously, GM's other major offshore engineering center - GMDaewoo - is also on the ropes. If GM has to choose which engineering center to support (with production also nearby), will they choose a) SAIC-GM in Shanghai (low costs, high eduction levels and local sales set to permanently be higher than anywhere else in the world) b) GMDaewoo (in a nation with moderately low costs and high eduction levels, but with a somewhat failed branding and image in Daewoo now Chevrolet) c) Opel (in a nation which is obviously part of a larger Europe now very deeply in trouble economically, and liable to have multiple national economic collapses and stagnating sales, plus massive overcapacity and high costs) d) GMNA (in a nation wich is obviously on the cusp of a massive economic melt-down due to inimaginable deficits and debts, with moderately low costs, but not particularly excellent educational levels compared to the rest of the world) I guess if I were simply just were a rational "martian" looking down, the answer would obviously be "a". GM should put their money into China, even if it can only own 50% (and now only owns 49% and does not control) joint ventures there.