Vauxhall Versus Opel?: Loans For Jobs Floated In Britain
GM Europe’s head, Nick Reilly, has suggested that the job losses at Vauxhall UK may not be as bad as was feared. Before GM did a U-turn with the sale of Vauxhall/Opel, Magna agreed with Vauxhall to cut 800 jobs, no forced redundancies, and keep the Luton and Ellesmere Port plants open. Then, GM realised they liked Vauxhall/Opel so much, they kept the company and put its European operations back at square one. So far, with “New GM” in control, the results can be summed up in 4 words: Annoyed the German government.
In the first face-to-face meeting between GM and UK ministers, Mr Reilly said that there may be a chance to “quite significantly” cut the number of excess jobs from Magna’s original figure of 800 jobs. This means that future of Vauxhall’s 2 UK sites is looking good for survival especially since the BBC reports that Mr Reilly was unsure about whether it would shut entire plants. Naturally, there were government loans at the bottom of this affair, but amounts weren’t disclosed. Whilst all this is good for the UK economy, it actually leads to a bigger problem. You see, GM Europe has openly stated that it needs to cut 10,000 jobs across Europe. If UK is taking less than 800 of that figure and Germany has been touted as taking 4000, that still leaves over 5000 jobs which needs to be cut. Spain and Belgium should be on their guard.
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Vauxhall's pretty much just Holden anyway right? I see no reason to sell Vauxhall if its just rebadges, If anything GM could just ditch the Vauxhall name and call them Holdens. That would save some cash and they could build Holdens in the UK and ship them to AU, unless AU has given Holden money or has import tarriffs
This is what I have been talking about. GM is in an excellent position to pit the various European governments and the various labor unions against one another. The tight link between IG Metall and the German government on all things Opel means that IG Metall is going to have a tough time keeping the other European Opel/Vauxhall unions united.
GM is well positioned to have a bidding war amongst the EU member states for who will get to keep how many jobs. This sort of thing has been going on in the US for a very long time. Big companies pit the various states against each other for subsidies, tax breaks and such. In theory the EU government doesn't allow this sort of thing whilst in the US the national government is ok with it.
This will be interesting business theater for sure.
EU rules forbid any jobs-for-loans arrangements. GM (and many EU countries) have a hard time grasping this. A big part of the Magna deal collapsed because of the EU. The only legal way to give money is by NOT making it contingent on keeping jobs and plants. This works great for internal consumption: A deal is struck to keep te jobs. Everybody looks good. Then Brussels shoots it down. Everybody throws up their hands, says "we tried," no money needs to be spent.
Also, FYI, no more cozy relationship with the German government an the unions. The left/right coalition is history. A new center/right Sheriff is in town.
Don't forget - Britain must have a general election by June 2010 and the sitting Labour govt is very unpopular so they'll likely promise anything to avoid job losses during the election campaign - much as they did when BMW dumped Rover.