GME To Rsselheim, Where Chaos Reigns

Bertel Schmitt
by Bertel Schmitt

This week’s chronicle of the Opel saga starts with good news and bad news.

The good news: GM’s European headquarters will move from Zurich, Switzerland, to Opel’s home in Rüsselsheim near Frankfurt, Germany, reports Die Zeit. The paper: “With the move, the company probably wants to collect points to calm down the German government.” Let’s put it this way: Putting the European GM headquarters into a country that is not even part of the EU, that is more known for its tax haven status than for its flourishing auto industry, did not amuse the Germans. Returning to Deutschland, GM can pat itself on the back: The move created 150 jobs in Rüsselsheim, which are lost in Zurich.

The bad news: It’s too late to collect points.

Germany’s Economy Minister Brüderle doesn’t want to spend a Cent on Opel. Brüderle thinks that “if at all, then the individual states should help,” writes the Rheinische Post. Then the paper adds: ”This is highly unlikely.” Right they are. If the states cough up money, it will be tied to keeping plants open and workers employed. This however is completely verboten by Brussels: No government money tied to saving jobs or plants allowed. Then why pay at all?

Nobody knows how much keeping Opel open will cost anyway. GM figures it’s €3b, a number that is widely regarded as a pipe dream.

IG-Metall union boss Armin Schild, according to Rheinische Post. figures “the restructuring will cost €6b, probably more like €7b.”

Magna thought the price tag would be €4.5b

Moody’s, according to Reuters: €5.8B

KPMG, according to Reuters, reckoned in September it would be €4.1b

A good chunk of the money will be needed to get rid of workers. In Europe, unless you go bankrupt, you need to pay them off. If GM wants to shed 10,000 jobs in Europe, then that alone will cost them €2.5b over the next 18 months, Die Welt learned. Apparently, that little detail just had slipped by Whitacre.

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.

More by Bertel Schmitt

Join the conversation
2 of 3 comments
  • Wmba Wmba on Nov 16, 2009

    More amazing revelations. Thanks Bertel for the heads up on the severance payments. Here in Canada today, we get this in the National Post newspaper: "General Motors Co. may use some of the money it won from Canadian and U.S. taxpayers in the spring to fix its Opel unit in Europe in the months ahead as it works out a new financing plan for the money-losing business. That could include tapping funds pledged by the federal and Ontario governments, said Chris Preuss, new GM's vice-president of global communications." And TTAC reports today, with caveats of course: "GM plans to repay the United States, Canadian and Ontario government loans in quarterly installments from escrowed funds, beginning next month with an initial $1.2 billion payment to be made in December." Since the only money they have is the taxpayer loans, where do they expect to get the money to pay for Opel and pay back taxpayers at the same time? It just gets worse. Maybe they should earmark some funds to repair the roof leak at the Bochum plant outside the paint shop, as reported in Business Week.

  • Newcarscostalot Newcarscostalot on Nov 17, 2009

    Maybe I should put that sign on my bathroom door...

  • Lorenzo They were willing to go against their customers' preferences to satisfy government, but now that they see it doesn't pencil out, they change their tune. Now is the time to tell 'em what we really want.
  • Tassos Generally I prefer that exploited labor remain domestic like in the service and trade industries. Given the complex and global integration of supply chains and materials sourcing I accept that most manufacturing must be managed by foreign 'kapos'.
  • Lorenzo 1 million barrels is 42 million gallons. The country uses 368 million gallons a DAY. The reserve was set aside after Hurricane Sandy caused a gasoline shortage for emergency vehicles. The hurricane season starts on June 1 and is predicted to be active. Nice going.
  • Chuck Norton Toolguy- I have. It's hard on the knees...
  • EBFlex Welp the corpse is at it again. They think they can buy votes by selling off from the SPR. The best thing they could do to get votes is close the border and start deporting people. That would guarantee them a win in November. As of right now though, they are not doing that and Trump is rising in the polls every day.