By on June 10, 2010

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.

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19 Comments on “This Time It’s Serious: Berlin Says Nein Again To Opel Aid...”

  • avatar

    Looks like I called this one wrong. Good for the Germans for doing the right thing.

  • avatar

    Time for Whitacre to put on his tap dancing shoes.

  • avatar

    Now it’s up to the rattlesnake-killer. If I were in his shoes, I’d sell Opel IP to Vauxhall, along with the tooling for the latest models, and let Opel go bankrupt. With a new conservative government, the UK won’t provide sny subsidies, but conditions more favorable to business are likely, and the British Pound is apt to be more stable than the Euro. But somehow, I don’t believe Whitacre has a plan B.

    • 0 avatar

      Can’t. Vauxhall is Opel. You can’t sell a company to a brand.

      For any other shenanigans: Germany takes a very dim view at anybody that takes or even “sells off” significant assets of a company before it goes bust. Can go to jail for that.

    • 0 avatar

      Vauxhall is a seperate legal entity, not part of Opel, but it does basically just rebadge Opel cars (whilst also operating two factories). So its legally possible under UK law,but probably not German law.

      However Vauxhall is much more popular in the UK than Opel is in Germany.

      Basically the Germans, having had to bail out the Greeks (and possibly other countries in the future) due to the failure of the Euro, have now very little money to spend. 66bn euros of government cuts have just been announced, and Merkel is out of favour.

      Subsidising a American company is not politically possible. What is surprising is that Merkel ever thought subsidising a Canadian/Russian lash up would be approved by the German taxpayer either.

  • avatar
    Geo. Levecque

    The Pound is in free fall much like the Euro, I know as our family has investments there that we are trying to sell property it’s turning into as “Muggs” game of sorts, the UK is much like Greece in that they are in a lot of S— just like Greece and on the 22nd of June there Budget comes down, then watch the Pound melt!

  • avatar

    This is hardly the end of this soup opera.

  • avatar
    Tricky Dicky

    Mmm, that would be the stable Pound Sterling, that lost 30+% of it’s value against the crummy Euro in the last 10 years?

    There’s not a gov’t in Europe that could afford to subidize Opel’s liquidity needs even if they could sell the politically distasteful message of bolstering regional overcapacity. Make no mistake, Opel hasn’t got any friends, apart from some German states where they have plants. And as the article shows, this goodwill is not exactly exchangeable for cash right now.

    If Opel is car sat on a hill, the handbrake has just come off and no one is willing to thrown themselves under the wheels to brake the momentum. Will GM throw some money bricks in the way, or are they going to let it career down the hill to finish off in a fireball?!?

  • avatar

    It is GM’s responsibility to run Opel. End of story.

  • avatar

    This is priceless. In a country that unapologetically leans towards Socialism, using state funds to bail out a native automaker is too extreme even for them.

    There’s a lesson there for the United States, but of course our politicians are too stupid/crooked to learn it.

  • avatar

    I can understand why they don’t want to give money to Opel. Daimler, Volkswagen, Ford of Europe and BMW all survived the recession rather unscathed and are still in strong, robust shape. This has made Opel an obvious fifth-wheel, and thus, it has to go.

  • avatar

    Since GM needs Opel’s engineering and tech, they can figure out how to fund it. The German gov’t has enough to do supporting its own people plus the weaker European states.

  • avatar
    Tricky Dicky

    Am not sure the German gov’t gives a flying fig about protecting weaker European States – they are most concerned about ensuring their currency doesn’t fall to bits because of other countries’ fiscal profligacy.

    @ RobF. – you’ve got to update those stereotypes my man. I suspect there are very few people in the US today who believe that unbridled capitalism is the most effective and efficient way of creating and distributing wealth. I mean, everyone has anti-trust laws as a way of modifying and controlling the excesses of capitalism. There’s a whole spectrum between Socialism and Capitalism and just because any one nation is not at the rightmost extreme of the continuum, doesn’t make them unapologetically socialist. Cheers, TD.

    • 0 avatar

      As counter-intuitive as it may sound, if you want to experience unbridled capitalism, you need to come to China.

      Just don’t get sidetracked that China is ruled by a communist party – by name.

      A staunchly right wing party in Germany, Bavaria’s CSU, translates into “Christian Social Union.”

      And don’t forget one of the most right wing parties of all, the Nationalsozialistische Partei Deutschlands, the National Socialist Party of Germany, also known as the Nazis.

      It’s just words.

      My former inlaws in Washington, DC, definitely were right from center. But were proud to have been listed in the “Social Register.” They also called it “the green book” without having a heart attack.

  • avatar

    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.

  • avatar
    Mr Carpenter

    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.

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