Berlin To GM: You Break It, You Buy It

Bertel Schmitt
by Bertel Schmitt

GM’s John Smith, and a freshly minted GME CEO Nick Reilly went to Berlin to see German Economy Minister Rainer Bruederle, hat in hand, hoping for some Opel funds. They left empty handed.

“I expressed my expectation that General Motors should basically carry out the financing itself,” Bruederle said after the meeting.

Bruederle said that Smith & Reilly disclosed that GM would need €3.3B to fix Opel which has half of its 50,000 employees in Germany.

According to Automotive News [sub] the GM suits apologized for “communication failures related to their decision not to go ahead with a planned sale of Opel.” Two days before, a contrite Fritz Henderson apologized to the German nation on the evening news. They seem to need the money badly. The same day, Chancellor Angela Merkel said in her policy speech to the German parliament that she expects that “GM takes over the lion’s share of the restructuring costs, which also means that it has to pay back the bridging loan.”

Even Opel’s labor leader Klaus Franz, who should have jobs in mind, sympathizes with Berlin’s newfound stinginess: “If the mother can’t let her daughter go, then the mother needs to take care of the daughter.”

Henderson, Smith & Reilly now hope to wring the last cent out of Bruederle’s “basically” and Merkel’s rest of the “lion’s share.” Good luck with that.

Bertel Schmitt
Bertel Schmitt

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=""> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href=""> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Discoholic Discoholic on Nov 12, 2009

    I always thought it was a singularly demented idea to sell off Opel - half the GM development is done in Rüsselsheim (including the Chevy Volt technology), and giving your expertise away to Russia for tuppence should be the very last thing you consider doing to save the company. Nonetheless, after GM's twelfth (or so) u-turn regarding Opel (sell it to Fiat, sell it to Magna, don't sell it, sell it to Magna again, "rethink" the whole situation, sell it to Magna again, oh - wait - let's keep it), it's not really all that surprising that the German government is now telling Henderson et al to FO&D. Of course the whole idea about delaying the process until the end of time was to eventually be in a situation where it was possible to keep Opel, but they could have said so in the first place. Since the European Development Center at Opel is basically the most important part of GM these days, who would have blamed the board?

  • Steven02 Steven02 on Nov 12, 2009

    I hope GM closes most of the plants in Germany. Germany tries to muscle GM into picking the buyer Germany wanted and then tried to say that there was no influence in the deal. Yeah right. Germany will just have many more people at the unemployment lines. I guarantee you that there are other countries that will help out.

    • Demetri Demetri on Nov 12, 2009

      Would you feel the same way if Toyota was failing and the US government refused to help them out?

  • Bunter1 Bunter1 on Nov 12, 2009

    Am I getting this straight? Germany says "We want the loan money back" and GM counters with "can you give us 3.8B Euros more". When they decided to keep Opel didn't they say they had a plan or something... Bunter

  • Wmba Wmba on Nov 12, 2009

    I've been trying to read everything I can find on this situation. I blame Ed Whitacre. He got Fritz to phone Merkel while she was traveling back to Germany after having had the honor of addressing Congress last week. GM gave Merkel no out, no gentle letdown about their change of mind, no chance for a little chat about things. They announced their decision to the press as well, and thereby basically insult Merkel. Stupid people. They apparently have no idea about politics whatsoever, and could care less. This is the leader of the third or fourth largest economy in the world, not some small city potentate. When Merkel found out that Obama was similarly clueless about the way his nationalized company was run (We knew nothing), that was it. From her point-of-view, Obama should have either stopped GM or told her directly. She felt insulted by the government as well. Thus Merkel was embarrassed in front of the entire German nation -- the deal she'd been working on for 6 months (bad though it was, it was still a deal) was turned down at the last minute, with no warning, as if she was an utter nobody. At that point GM was fucked. Doubly so when Fritz asked for the same money Germany would have lent Magna. You insult me, AND ask for money? There's no way the European Competition people are going to let any country in the EU give money to a company to save jobs. It's against the rules. The only way out was through a change of ownership like Magna's bid, and that was iffy. Did GM ask about the situation and request guidance? Not at all. These people are far too big-headed and egocentric for that. We'll keep Opel, and to hell with all the effort others had put in to sell or buy it. Any plans for GM selling a million Daewoo "Chevrolets" a year in the EU by 2014 are also highly unlikely. Any country in the EU stupid enough to try to sweeten a deal to get a factory to make Daewoos will face a horde of German civil servants complaining to the EU about unfair competition. Whitacre and the clueless board at New GM screwed themselves. Politics matters. Opel is bankrupt. It will disappear. Merkel has already advised her countrymen that unemployment will skyrocket by over a million by this time next year, so 25,000 lost Opel jobs are just a drop in the bucket. The merry band of swashbucklers at New GM's board did not think this one through. They gave no credence to European politics or rules, didn't even consider them, but acted like they were dealing from a position of power. Too bad. They lost. And there goes more taxpayer money down the bottomless pit of GM hubris. Meanwhile, the US government might want to wake up and inform themselves what this band of idiots are up to. To Merkel, and most other modern government leaders in this world, it is expected that the owner of a huge nationalized company - Obama in this case - has some clue what the hell that company is doing out there. The slapdown Germany is administering to GM is equally directed at the US government, IMO. So GM had better cough up the remainder of the bridge loan by the end of this month, or else GM's physical property will be seized for a "sheriff's" sale. Plus Magna is about to sue GM for 100 million Euros for scuppering the deal which it had spent millions and millions on negotiating with Germany and all the other European countries where Opels are assembled. Just appallingly bad judgement from Whitacre. Tell me if I'm wrong Bertel.