Breaking: GM Does a 180; Decides to Keep Opel
Two days ago, TTAC’s Bertel Schmitt wrote: “GM may not have to sell Opel after all”. How right he was. In the latest twist on the endless Opel saga, GM’s Board of Directors has canceled the planned sale to Magna and Sberbank. With references to an an improving economy (and an uptick in US sales?) and Opel’s strategic importance to the mothership, CEO Fritz Henderson stated: “GM will soon present its restructuring plan to Germany and other governments and hopes for its favorable consideration. We understand the complexity and length of this issue has been draining for all involved.” Magna had no (repeatable) comment. Former bidder RHJ said in October it was no longer interested.
On a preliminary basis, the GM plan entails total restructuring expenses of about €3 billion, significantly lower than all bids submitted as part of the investor solicitation. GM will work with all European labor unions to develop a plan for meaningful contributions to Opel’s restructuring. While Opel continues to outperform against its viability plan assumptions and immediate liquidity is stable, time is of the essence.
“While strained, the business environment in Europe has improved.” Henderson said. “At the same time, GM’s overall financial health and stability have improved significantly over the past few months, giving us confidence that the European business can be successfully restructured. We are grateful for the hard work of the German and other EU governments in navigating this difficult economic period. We’re also appreciative of the effort put forward by Magna and its partners in Russia in trying to reach an equitable agreement.”
Well, that was a vertigo-inducing ride, [GM].
More by Paul Niedermeyer
Comments
Join the conversation
Dear Pch101, please don't blame free enterprise for GM's debacle. The United States has not had free enterprise since early last century. A oligopoly such as GM and Ford with a few other players "allowed" to stay in the game (to avoid having GM dismantled, mostly) also doesn't qualify as free enterprise. Neither does having one union representing all the workforce in the companies, by fiat (i.e. government decree - which is essentially what happened). That's a monopoly.
I knew GM didn't really want to give up Opel. That was a dumb move in the first place, but one made in desperation.
I fully agree with FromBrazil. GM here is going down...
@ dougjp Magna was going to do the same thing. Close plants and let workers go. This was going to cause strikes anyway. People in the US are still buying GM. My guess is that the same thing will happen in Europe and Russia. Chapter 7 may very will be in their future, but their pensions are safe. Gotta love our gov't.