Bailout Watch, German Edition, Fnf: A Summit Without Sums

While managers and union leaders of Opel and GM-Europe had a crisis summit with German Chancellor Angela Merkel and her ministers at the Kanzleramt, the drumbeat of “disentanglement” of Opel from GM picked up a steady rhythm. On Saturday, it was just whispers being picked up by TTAC from German contacts. On Sunday, it was press reports that openly discussed to jettison the Opel lifeboat from the sinking mothership. Today, everybody says it was their idea. Even Opel managers, who were just privately grumbling before, are outing themselves: “Managers at Opel would ideally like to see the unit spun-off from GM, a move which would decisively disentangle the company from the financial and political dramas unfolding in Detroit,” writes Germany’s news magazine Der Spiegel. “German politicians and union leaders like Armin Schild also support the idea. Schild declared on Monday that GM must “let Opel go free.” Free, but where, and how?

Now, it’s no longer whether Opel should be spun off. The discussion centers – in typical German fashion – on how complicated it may be, and who would be doing it.

“The two companies have become intimately intertwined,” writes Der Spiegel. “Opel develops cars for all parts of the GM empire, contributing technical know-how not only to the production of vehicles in the American and European markets but also, for instance, for the South Korean subsidiary Daewoo.” Sounds more like a problem for GM than a challenge to a liberated Opel.

Der Spiegel continues: “Further complicating a separation is the fact that prevailing market conditions would make it difficult to find a buyer.” Difficult, but not impossible. Especially with governmental prodding and financial support. If a diminutive Porsche can acquire a very healthy Volkswagen, a proper suitor can be found for an Opel at fire sale prices.

Just like TTAC, Der Spiegel is puzzled why Foreign Minister Steinmeier would be holding his own meetings with union and auto executives: “Steinmeier’s meeting has raised a few eyebrows. Ronald Pofalla, general secretary for Chancellor Merkel’s center-right Christian Democratic Party, told the German press agency DPA that Steinmeier’s portfolio does not include economic policy and that he had no business conducting such a meeting in the foreign ministry.” Ah, the wonderful world of a not-so-grand coalition.

Can’t fault Germany’s Foreign Ministry for not being quick on their feet: “The ministry countered that no branch of the economy is as internationally embedded as the auto industry.” Yeah, sure.

Later in Germany’s afternoon, Berlin started to lower expectations: “We are trying to get first-hand information,” said someone close to Frau Merkel to Die Welt. A decision about loan guarantees would not be on today’s agenda. And if the bailout won’t go down, the German government already found someone to blame: “We need to observe the European law regarding fair trade and subsidies.” It’s not us! It’s the law!

In the evening it became clear: the meeting went nowhere. Associated Press quotes Chancellor Angela Merkel saying “it is not yet determined” whether automaker Adam Opel would get loan guarantees from the German government. Even the chanceloresse bangs the disentaglement drum: “The problem here is the 100 percent entanglement between Opel and GM.” Merkel says the German government plans “further talks” and should reach a decision by Christmas. Knowing that Germany typically shuts down by mid December, and doesn’t come back from skiing or warm vacation spots before mid January, this sounds like better luck next year. And cross your fingers the mothership will be above water by then.