Opel Watch: GM Folds
In the high states poker for Opel, GM did put the cards on the table, got up and walked.
Automobilwoche [sub] reports that GM handed over “all European plants, patents and access technologies debt free to the Adam Opel GmbH.” It’s official, the supervisory board of Adam Opel GmbH has acknowledged it. What’s more, the supervisory board of the GmbH (in reality, GM) “accepted the trustee model of the German government.” This clears Opel for a new investor, and keeps the company clear of the downdraft caused by the impending bankruptcy of the mother ship.
Tonight, there will be a meeting in Berlin that may decide who will take over Opel—with more than a little help of the German government. It could be a long night.
According to recent reports, the night most likely will be inconclusive.
Government spokesman Thomas Steg told reporters in Berlin that the meeting was unlikely to decide on a single preferred bidder, Reuters says. The focus would be on narrowing the field: “It is much more probable that talks will be continued with at least two investors after today’s meeting.” To buy time, the government may decide on bridge financing instead. With Opel separated from GM, the matter is less urgent and Berlin can negotiate with contenders at leisure.
BAIC, the Chinese contender, couldn’t come in time for the meeting, says Automobilwoche (it’s a long way from Beijing.) However, they are still in the running.
We predicted Opel heim ins Reich last November. It was an easy call.
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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The German government is protecting jobs in Germany - Opel. Vauxhall are being ignored because the UK govt hasn't come up with the Euros or £s. We had Lord Mandelson (mandy), the UK Business Secretary on TV tonight saying that Vauxhall aren't in as bad a shape as Opel and that's why there's no UK taxpayer money on the table yet. Right. Just shows how much he understands multinational business. I very much doubt that Vauxhall is self funding - it shares product with Opel Europe, and also cash. The GM Europe treasury control the cash on a continent wide basis and leave enough in the national company's bank to meet the local liquidity rules. And why would they leave any more than the minimum in UK currency when it's weakening vs the Euro? So, if Opel Germany need money, do you really think the German govt will allow them to send Euros to fund Vauxhall? I think Luton and Ellesmere Port are toast, just a matter of when.
"Don’t worry, there’s always a delay. Inflation does not occur instantaneously….but it’s coming." Inflation requires too much money chasing too few good and services. Just where is the requisite scarcity of goods and services to come from? Nearly every industry around the globe has massive excess capacity lying fallow. I remember in Econ 101 learning that increased government borrowing necessarily caused higher interest rates as government bonds push private lending to the side. Then Regan went on a massive borrowing binge ... and interest rates plummeted. Economics is called the dismal science for good reason. The dismal is clear, the science is questionable. Good science allows highly accurate predictions to be made based on starting values and equations. However, Economics has yet to demonstrate the quality of actual result prediction in the same ball park as chemistry or physics. Anyone who is dead certain what is going to happen in the future is more than 90% likely to be wrong.
"Final solution" Rastus? That's pretty bad taste (putting it mildly). Because of the pressure of September elections, the German govt have allowed the future of Opel to become a single issue idea - protecting German jobs. This will come at the expense of jobs in the UK and Belgium (where excess Astra capacity can be culled and moved to Bochum and Gliwice (GER and POL). It makes me wonder at what point Marchionne will wash his hands of it and say that all the industrial logic of rationalisation is destroyed? I am sure the German gov't will force Fiat or Magna (aka Russia by proxy) to make long term commitments to those German plants too. No hanging around for a year or two before you swing the axe. Multi-billion guarantees require multi-year contracts. Does the Poker analogy even work here anyway? German govt can see both sides of the cards and they are the only ones with money enough to be at the table.