By on December 27, 2009

State Premier of Hesse Roland Koch. Picture courtesy daylife.com

Russia’s Sberbank isn’t the only party that is unhappy with GM and wants to see money.

Germany’s government wants GM to put “a lot of money” on the table before any further discussions about European state aid for Opel would be entertained, reports Germany’s Handelsblatt.

Note that the harsh comments are coming from Roland Koch, Premier of Opel’s home state Hesse. Previously, Koch had been a vociferous proponent of state support for Opel. Not more.

According to Koch, any further discussions about state aid to Opel are, at this point in time, “completely baseless. The circumstances have changed. GM is a solvent company.” Koch demands from GM a considerable contribution to safeguard the future of Opel. “Those who want to own Opel 100 percent have to step up to the plate when it comes to investments and financing.”

The Premier of Hesse, a state which has no other auto manufacturers (except for Volkswagen’s parts distribution center in Kassel,) is amazingly sympathetic with the plight of other car makers. Koch concedes that Germany’s Abwrackprämie and other European scrapping schemes had a pull-forward effect, which will leave a gap in 2010. Closing this gap “will be easier for more export oriented companies than for Opel, which is focused on the European market,” Koch said. Translation: Opel won’t make it.

GM should invest “a lot of money,” and present a solid business plan. “Then we can talk.” Without that, any further debate about federal or state aid for Opel is for naught.

After German Economics Minister Rainer Brüderle had said that EU governments won’t exchange financial aid for jobs at Opel, talk about EU government money has died down. Message from Europe to GM: You’re on your own.

Following Brüderle’s comments, Nick Reilly said: “There is a belief out there that GM has sufficient money in the US that it can spend in Europe. That is not the case.” Assuming that both Brüderle and Reilly were telling the truth (we know, we know,)  then Opel is SOL.

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20 Comments on “GM Needs To Invest “Lots Of Money” In Opel. Their Own...”


  • avatar
    MikeInCanada

    And now for the political posing…..
     
    Despite the rhetoric, every government that GM has threatened with a shutdown has caved in and come up with the cash.  Sadly, the Germans will fall in line.

  • avatar
    lw

    I have no doubt that the governments will step up to save jobs.. but we are getting close to the point of saving jobs for which there is no work.
    I expect pics in 2010 or 2011 of auto workers being paid to sit in factories and play cards.
    Whatever happened to those storage facilities that had 10s of thousands of vehicles parked in them? Did government stimulus empty them out?

  • avatar
    rmwill

    Germany tried to play matchmaker to force Opel jobs to remain in Germany at the expense of their EU partners in violation of EU rules.  Merkel thought she was playing God, and had her megoloamanical head handed to her by Ed Whitacre.  Serves her right for meddling.  If anyone owes Skerbank anything its the Merkel Government.

    If I was Ed, I would force the meddling Germans to pay extra for each ineffecient IG Metal job so that GM makes money with German labor.  Make Merkel play the loser in a game of stinkyface.

  • avatar

    Despite the rhetoric, every government that GM has threatened with a shutdown has caved in and come up with the cash. Sadly, the Germans will fall in line.

    Not exactly. There have been no more mentions of government aid since EU ministers met in the first week of December. For money to be flowing, GM has to submit a plan to Brussels, Brussels must accept it. Brussels is very reluctant to do so. GM doesn’t appear to be in any hurry to submit a plan – most likely because there is none. Reilly said GM won’t put up more than 20 percent of the money needed to turn around Opel, the European governments are supposed to come up with 80 percent. GM wants to keep 100 percent of Opel, and the tax payer is supposed to finance 80 percent? I don’t think so.

    If I was Ed, I would force the meddling Germans to pay extra for each ineffecient IG Metal job so that GM makes money with German labor. Make Merkel play the loser in a game of stinkyface.

    And how would you do that if you was Ed?

    • 0 avatar
      rmwill

      Then GM should take a steely business approach and close all inefficient Opel operations down. (Saab?) That way they avoid all the political crap that comes along with assistance.  If there is one thing that Ed W has learned its the perils of inviting politicians into your business.  Whatch how fast they pay back the US taxpayers.

  • avatar
    lw

    Ed could offer to keep Opel running if the EU agrees to subsidies that ensure under any/all circumstances Opel breaks even for GM.  Let’s say until 2014.
    He makes this offer, sets a date for say April 1st and if the deal isn’t done, on April 2nd he shuts Opel down.

    • 0 avatar
      charly

      Opel designs the cars for GM. No Opel, no cars GM can sell, no GM. The only way out for GM is the Hail Mary. If it is a success than GM can close Opel otherwise it is an hollow treat

  • avatar
    John Horner

    Perhaps GM will simply wind down all of the high cost European factories, keep design and engineering centers in Germany and perhaps the UK. Keep the factories in Poland, Russia and perhaps Spain. Sell what can be sold profitably in the EU from those factories plus imports from Korea,  China, Mexico and maybe even the US. Considering the strength of the Euro, exporting to Europe from the US is probably more profitable than building cars in Germany can be.
    Ta Da, with such a scheme GM Europe could be a profitable enterprise, albeit smaller than it is today and with tens of thousands fewer employees. This seems to be what Germany and the EU are telling GM to do in so many words, and it may well be the sensible way to go.

    • 0 avatar
      rmwill

      @John

      Thats exactly what GM should, and now will do, but Queen Merkel wants to rig the game and make sure the German operations remain even if they are a bad business proposition.  Magna and Skerbank were willing to agree to this in exchange for subsidies that were eventually ruled illegal.

    • 0 avatar
      charly

      You need the interaction between factory and engineering center otherwise it goes wrong (purely theoretically as nobody has been stupid enough to try it out)
      The German of the Poles is bad and non existent for the others. Also building a factory is expensive but keeping it running isn’t that expensive.  Moving a model cost more than any savings in labour

    • 0 avatar
      Steven02

      charly
      Could this not be done still?  Just because the engineer is in Germany doesn’t mean he can’t work with someone from Poland, Spain, or any other Opel plant.  You can’t tell me someone at both locations can’t find a common language to speak.  And no one is talking about building factories.  They are only speaking of using existing ones in cheaper countries.

  • avatar

    funny how everyone talks about how badly “GM” has handled the Opel situation. realize folks there is an actual person representing General Motors. his name is John Smith and he is, and has been for a very long time, central to the company’s decline. he needs to go and soon.

  • avatar

    Rex Grossman didn’t lose the Superbowl all by himself, but he was by far the biggest reason.

  • avatar
    lw

    Point taken. I still have painful memories of Neil O’Donnell throwing 2 interceptions and losing Superbowl XXX.

    My point is that walking into those games, these guys were studs, until they blew it.
    From what I’ve gathered, Smith hasn’t been a stud for awhile…

    So why do his bosses keep sending him into the big games?

  • avatar

    No idea other than he is Gerosa’s boy. Don’t know he’s ever done anything notable. Have dealt with him, he’s rude and an elitist.

  • avatar
    psarhjinian

    Despite the rhetoric, every government that GM has threatened with a shutdown has caved in and come up with the cash.  Sadly, the Germans will fall in line.
     
    Not necessarily.  Europe doesn’t need the relatively small slice of the market that GM represents; not the way that Korea, Canada or the US does.  The failure of Opel/Vauxhall would just embolden and enrich existing European players looking for a way to grow.
     
    This is why VW was so vociferously opposed to the Magna deal: it would have kept Opel viable in the Europe, where RHJ or GM’s own plans would have seen them, likely, wound down or gutted.  VW stands to gain the most from a failure of GM Europe, and Europe wouldn’t particularly mind seeing their native marques pick up marketshare, rather than GM cranking out EuDM models off of Daewoo or SAIC production lines, even if it means a few thousand jobs lost in the interregunum.
     
    This is all very different from Korea or North America, where GM’s failing would hurt it’s competition and the economy as a whole.

    • 0 avatar

      The failure of Opel/Vauxhall would just embolden and enrich existing European players looking for a way to grow.

      Exactly. What the more myopic commenters overlook is that the European market is set up for a big contraction in 2010 as cash-for-clunkers wears off. Jobs will be lost because of this. It becomes a triage matter. Governments have to choose whether they support fairly healthy indigenous car companies, or a dying, yet arrogant American company.

      As for John Smith, it appears as if he is being dispatched when GM wants to see a deal go down the drain.  A search for him sees him pop up in connection with Saab.  His last grand idea seems to be to put the Saab name up for sale. BAIC might be interested. A soon-to-be-unemployed Saab engineer said: “This is as if a bad guy watched someone die and then snatched his ID card to sell it.”

  • avatar

    only one interaction with Docherty. she was pleasant and courteous. as to her ability and past accomplishments, I cannot say much except that there are no glaring successes. I disagree with her continuation of Red Toe Tag sales and crossword puzzles of incentives, and her time at Pontiac was certainly less than impressive to say the least. still the woman was respectful and professional towards me. also must add she really doesn’t know what a Buick is supposed to be, but perhaps she will learn…quickly I hope.

    Smith on the other hand is flat out rude, and in my opinion a complete and absolute jerk. surprised Whitacre hasn’t swung the ax on him as yet.

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