Editorial: Bailout Watch, German Edition, Drei: Opel, Heim Ins Reich?

Leave it to the B&B to really transcend the as-good-as-defeated General’s Battle of the Deficit-Bulge, aimed right at the German taxpayer’s money, a.k.a. Government loan guarantees for Opel. Tireguy typed: “The imminent bankruptcy of GM could endanger seriously Opel, although Opel is still profitable.” Deutschland appears to agree. As we shall soon see, some may have a slightly less philanthropic angle. Let’s get right to the point: Opel, Heim ins Reich, anyone? Indeed, some in Germany seem to be itching for a re-match of the Ardennenoffensive. Opel is GM’s heavy artillery in the bastion Europe. Some 75 percent of GM’s European business comes from Opel. If the not-so-secret plan survives, the offensive against General “Nuts” Wagoner will be fought partially in Brussels, coincidentally not far from Bastogne. The broken record called history repeats, again and again. Executive summary of the order of battle follows. Right this way, please!At the home front, the General begs for money, as amply chronicled in 190-and-growing episodes of the bailout watch. The General’s attack on the federal reserve troops gets bogged-down in the swamplands of Washington. If there is a chance of success, the EU shouts: “Incoming! Unfair trade practices!” With a cruise missile en-route via the WTO. Further hand wrangling ensues. That’ll keep ‘em busy. Meanwhile, back in Germany, Opel falls into the honey-trap of government money, loaded with caveats. GM goes bust, Germany forecloses Opel to keep Opel open. A white knight. Dankeschön. What did Willy Brandt say? “Jetzt wächst zusammen, was zusammen gehört.” Germany and Opel, together again. Re-united, 80 years after Opel had sold out to GM, also coincidentally, during a prior Great Depression of 1929. Sound far-fetched? You think, Porsche’s financial engineering was/is easy? Compared to that, a grab of Opel would be child’s play.Quick summary of what happened after “Bailout Watch, German Edition, Zwei: “Angela, I’m Sorry. Opel Deserves Less:” Silence from Berlin. What do you expect, everybody who’s somehow related to money was already on their way to Washington, to attend the G20 gabfest widely misnomed as Bretton Woods II. (Some leaders of state call it a Bretton Woodshed, because they want to take America behind it.) Berlin signaled they’ll take up the Opel matter once back from DC.Amongst the German states, Demant’s plea caused considerable chatter, especially emanating from states where Opel has factories, and voting workers. General consensus: “Loan guarantees? A definite maybe. Let’s think about it.” Most hectic is Opel’s home Hesse. On Monday, their cabinet shall clear the draft of a law that is being typed up over this week-end. Come Wednesday, the state of Hesse will convene its parliament to hopefully approve loan guarantees to the tune of €500m for Opel, but, mind the fine-print, “also for the parts suppliers,” Autohaus reports.There are 1600 parts suppliers in Hesse alone, already buying hats to have them ready in their hands. Rhineland-Palatinate, where 3350 workers assemble components for Opel (and, as we shall soon see, all of GM, which hasn’t paid their bills) has signaled that they might sign-on also, “in the interest of our workers,” quoth Palatinate’s Premier Kurt Beck. In Eisenach, Thuringia, where 1728 workers assemble the diminutive Corsa, help is not being ruled out. But it comes loaded with blasting agents. Again, if Opel gets help, scores of parts suppliers won’t be left out either.Then, Mike Mohring, head of the ruling CDU faction in Thuringia, proposed a “car summit,” chaired by Berlin, with all German auto makers and representatives of the parts suppliers around the table. That according to the Handelsblatt. Imagine your competitors and creditors having a sit-down, deliberating your fate. No good for Opel can come from that one. North Rhine-Westphalia, where 5000 workers make the Kadett and the Zafira in Bochum (they also make axles and transmissions for all of GM, which as we shall soon see, is in arrears) was last to at least “show willingness” to underwrite the loan guarantees, their paper WAZ reports today. That’s the good news.Now, let’s serve up a little something to cleanse the palate for the Euros on the collection plate circulating amongst Deutschland’s Länder. The Sueddeutsche Zeitung, based in Munich, home of BMW, dropped the bombshell that Opel is in tatters, because they are waiting and waiting and waiting on €2b of unpaid bills from Opel to GM. The unpaid bills are sitting on the desk of “Red Ink” Rick. The check isn’t even in the mail. The paper has the info from “sources amongst the states.” Looks like someone at Opel spilled the unaccounted-for beans to their Premier, he told it to another Premier, the driver of the state BMW overheard it, and it landed in the Munich paper.Opel needs loan guarantees, because GM can’t pay? That’s no grounds for amusement, especially not in states where GM doesn’t have plants, but Volkswagen, BMW, Daimler, et al have. Just to make matters more interesting, those other companies also make EU-like noises along the lines of unfair trade practices. They say it might be against the law if Opel gets its exclusive snout in the German trough. “All, or nothing!” is their war cry.Interesting also the latest utterings from Opel-Chief Hans Demant. After wagging his tail at Wagoner, Demant suddenly seeks a little distance from the sinking mother ship. He says, the guarantees are a precaution for the “theoretical case that the financial streams with GM in the USA go dry.” (Translation: When GM gets blown up with a compound commonly known as C7.) If that is the case, then “Opel will need the cash to continue.”A-ha! Dermant, no fool, already pandering to interested third parties? If you ask Europe’s auto makers, they all think Opel is doing just fine. Their cars are respected competition. Opel’s numbers are generally regarded as black. If there is any recent red, then it’s caused by GM who sucked Opel dry. Soon, they’ll be black again. Opel is contemplating a rigorous austerity package. Even travel expenses and bonuses for managers aren’t sacrosanct. At Opel. Not in Detroit.Anyway, remember Demant’s hint that GM shouldered him with €1b of losses? It takes experts versed in the arcane arts of transfer pricing between arms-length parties to get to the murky bottom of this, but rest assured, they will. Before Opel will see even a single governmental cent, they will have to open their books as wide as the coat of a dirty old man in Central Park. Germany’s Minister of Economics, Michael Glos, says “solid numbers must be put on the table so that we can analyze the situation.” Ouch, the auditors.Next thumb-screw to come: Opel will have to prove that “the money won’t flow back through the Atlantic and vanish in a big hole in Detroit,” as one industry wag said it to the nods of all not associated with Opel. Demant was surprisingly prepared for this: “Any monies will only be used for investments into R&D and tooling in our European plants. Under no circumstances would the money go abroad.”“And where is the re-match of the Ardennes?” some will undoubtedly question. Glad you did ask. Eins: Rest assured that if the loan guarantees come, there will be language to get the German assets into the hands of the German guarantors in case of a default. If needed, a default can be assured via WTO action. Zwei:Whenever matters automotive are being discussed in Germany, no story is complete without a quote from Prof. Dr. Ferdinand Dudenhöffer, automotive wag extraordinaire, who once was suspected by Spiegel magazine that he was in Daimler’s deep pockets (Dudenhöffer sued, Spiegel retracted.) Handelsblatt printed a long interview with the Professor: “Opel has only two chances left. One chance is that they get sold to an interested party with money. The other chance is that GM gets bailed out by the US government.”Note: Dudenhöffer is on the side of the 60% of the Americans who predict bankruptcy for GM, heck, all of Detroit. Note: A sale is first of Dudenhöffer’s short list of chances. Yet he cautions: “To find a buyer, in the midst of a crisis, will be tough.” Someone hatching (or hedging) plans to get Opel on the cheap? We haven’t heard the last of it….