Berlin Has "Serious Doubts" About Opel's Turn-Around Plan

Bertel Schmitt
by Bertel Schmitt
berlin has serious doubts about opel s turn around plan

The German magazine Der Spiegel got its hands on an internal document. In the paper, the German economy ministry gives an awful assessment of the business plan that Nick Reilly had circulated amongst interested parties. Interested parties being the countries where Opel has plants and where GM wants to collect €2.7b in government aid. The Spiegel’s article will appear in the printed issue on Monday. But there are some damning pre-releases.

Minister Rainer Brüderle has serious doubts about Opel’s restructuring plan. “The viability is questionable,” the internal memo says. The planned job cuts are “hard to understand.”

And once more, Germany’s all-time phobia when it comes to Opel aid emerges: According to Brüderle’s paper, there is a risk that state aid for Opel will ooze away to Detroit, for instance as license fees. “A ring-fencing plan has not been presented,” says the Brüderle expertise.

The states where Opel has plants already see the writing on the wall and probably have seen the writing in the memo. According to Der Spiegel, the states have already written off aid from Berlin. There is talk that the states would come up with €750m, but only if GM matches the sum to bring the total to €1.5b. A symbolic gesture, as Reilly had already said that there won’t be another dime from Detroit. A “nein” from Berlin would also set a precedent for other countries. Why pay if Germany won’t?

As another sign that Germany wants to put a knot in the purse strings, Brüderle asked the EU in Brussels to rigorously examine the legality of any support for Opel. He requested the vice president of the European Commission Joaquín Almunia, “to examine critically whether the business plan is viable and whether competitive distortions in Europe can be excluded,” said Brüderle to the Sueddeutsche Zeitung. Not that he’s against Opel. His first car was an Opel Kadett, a hand-me-down from his dad. Now, Brüderle’s car is a Mercedes.

Before any money will flow from any EU government, Brussels has to bless the plan. It’s pretty obvious that Brüderle is setting the scene for a desecration instead. Any guesses that Brussels will certify the viability of Reilly’s plan if Berlin thinks the proposal is questionable? Opel profitable in 2012?

One thing becomes clear: Nobody is tripping over each other to bail Opel out. Of course, the other automakers, from VW to Daimler, are against it. Surprisingly, even the unions demanded that the plan is not to be funded. In the public opinion, Opel is off the Radar. Europe has too much capacity, and Opel won’t be missed. As the incentive measures are petering out, industry groups see 2010 sales in Europe, in Germany especially, collapse. Russia is a nut case. Somebody has to go. The engineers in the Opel tech center will find a job elsewhere in a few seconds, there is a shortage. The growth market is China, and without Opel technology, GM China will be selling Daewoos. Which would suit VW et al just fine.

Update: Faced by heavy opposition from all flanks, Opel is ready to sue for peace. An Opel spokesperson said to the Deutsche Presseagentur that management and unions will sit down at the bargaining table. Works Council leader Klaus Franz said the “workers are ready for constructive negotiations,” as long as there “is a will to compromise.” A date has not been scheduled yet.

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2 of 32 comments
  • Buckshot Buckshot on Feb 14, 2010

    Opel needs to die. Poor quality and very dull to drive. Building cheap cars in Germany is an oxymoron

  • Tricky Dicky Tricky Dicky on Feb 16, 2010

    Buckshot - you are shooting from the hip there. Opel engineers would argue that they have on many occasions (by people stood on the left hand side of the Atlantic Ocean!) been asked to cut back on quality or to delay innovation in their products. Opel's staff feel that they can compete with the best if they were given total responsibility for their product planning and execution. Nick Reilly's recent rallying speech to the workforce was asking them to consider the positive aspects of being part of the GM family, not to improve their quality. Losing Opel would be a shame i think, but they are fast running out of people who love them and i think that all Ed Whiteacre managed to achieve was to unite people in hoping to see a Texan man eat his own words ("The German Chancellor dame can keep her euro-dollars 'cos we'll pay for our own darn rescue all on our ownsome!") [my abbreviation]

  • NotMyCircusNotMyMonkeys for that money, it had better be built by people listening to ABBA
  • Abrar Very easy and understanding explanation about brake paint
  • MaintenanceCosts We need cheaper batteries. This is a difficult proposition at $50k base/$60k as tested but would be pretty compelling at $40k base/$50k as tested.
  • Scott ?Wonder what Toyota will be using when they enter the market?
  • Fred The bigger issue is what happens to the other systems as demand dwindles? Will thet convert or will they just just shut down?