Opel Rescue Delayed
GM was supposed to have a restructuring plan for Opel in place by the end of December, but it’s looking like that deadline is DOA. In a blog post at GM Europe’s “ Driving Conversations” blog, GME supremo Nick Reilly explains:
While it is indeed exciting to see that things are coming together, bear in mind this is going to be one of the largest, most complex industrial reorganisations in European manufacturing in years. It will affect thousands of people and their families; impact plants and other stakeholders.
We are determined to do this right. We must do this right. Although we had hoped to have the new business model finalised in December, it appears that more work needs to be done and further consultations will not be rushed.
I said earlier that we would have a plan in place by year-end. Now it looks like an announcement may slip into January. This is not a broken promise. It is a pledge to do something right.
More likely, the problem is cash-related. GM has thus far only offered to pay 20 percent of the cost of restructuring Opel, or about $1b of the estimated $5b price tag. The rest would come from European governments, who are not eager to see unemployment rise if Opel goes under. At least that’s the theory.
And though in some respects that seems to be a fairly safe bet (according to Sergio Marchionne, no OEM auto factory has been closed in Europe since before World War II), GM is incredibly unpopular in Europe. Speaking at a conference in Brussels, Justus Haucap, the chair of Germany’s Monopolkommission said that aid for Opel would distort competition, possibly putting automakers like VW at a disadvantage. This, despite the German government’s previous willingness to violate EU rules to fund the sale of Opel to Magna. According to Haucap, Opel’s problems started “long before the financial crisis” as the automaker’s sales have fallen by 100,000 units since 2005.
According to the WSJ, Haucap believes “It is also unclear why Opel should have no other source of funding given that it is 60% owned by the U.S. government,” and that “he is optimistic that the new German government will have a more competition-based approach to helping Opel.” In plain English: nobody wants to give GM money to keep Opel.
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I think the Marchionne quote was referring to German car factories not closing. Plenty of plants closed in the UK for example, Renault shut up shop in Brussels about 10 years ago for a continental European example.