Reaction To Reilly's Restructuring Plan For Opel: It Sucks

Bertel Schmitt
by Bertel Schmitt

Here are the first reactions to Nick Reilly’s turn-around and begging plan for Opel. In one word: “Booooh!”

Roland Koch, Premier of Hesse, where Opel has its headquarters, where most of Opel’s jobs and countless suppliers are, should be most interested in the survival. What was his reaction? “According to our first assessment, it will be necessary that GM as the owner will increase its contribution considerably,” he said to Das Autohaus. Translation: “Put money on the table. Then we talk.”

Little know factoid: In 2008, Opel was the 7th largest employer in Hesse, followed by Volkswagen, only 2,800 jobs behind Opel, most in a parts factory and distribution center in structurally weak Kassel. When Opel has finished its reduction in force plan, VW will provide more jobs to the state than Opel. Koch knows which side his bread is buttered.

The unions, which should be most interested in preserving jobs, immediately shot down the plan.“We will not support this plan, especially not with contributions from our side,” said Armin Schild, IG Metall union leader and member of Opel’s supervisory board. His union brother Oliver Burkhard, leader of IG Metall in North Rhine Westphalia, where Opel has the Bochum plant, said outright that there should be no government support for the plan. Works Council boss Klaus Franz calls Reilly’s plans “business hara-kiri.”

If there is no agreement between management and unions, there will be no government money. Said Kurt Beck, Premier of Rhineland Palatinate, where Opel has a plant in Kaiserslautern: “There must be agreement between the workers and management.” Otherwise, no government money.

Peace with the unions is just as remote as more money from parent GM. Forget about any Detroit dollars, says Reilly: “Opel is a European company.” (Are you sure, Nick? Ask Whitacre.) “GM needs its money to repay the loans of the Canadian and U.S. governments.”

Even on the outside chance that peace breaks out between Reilly and the unions, and that Detroit sends a big check to Rüsselsheim, government support needs to overcome nasty regulatory hurdles. The Opel money would have to come from the so-called “Deutschlandfonds,” a fund created to rescue companies that became a victim of the recent recession. Die Welt names the two essential criteria: A valid business plan. And the company must have been viable before July 2008. Ouch on both counts. Says the Süddeutsche Zeitung: “Experts doubt that Opel meets the criteria.”

Finally, any government aid must pass the scrutiny of Brussels. The EU will be on the lookout for any jobs-for-aid deals. And why give aid if it doesn’t save jobs?

Also, Europe has bigger problems than saving a damsel in distress that had refused to be saved before. All eyes are on Greece and how it could blow the Euro to smithereens. Once Greece is taken care of, attention will shift to what is called the “Club Med” of EU countries, Spain, Italy, Portugal that are facing financial meltdown. Opel has turned into a simple distraction.

Some hints to the commentariat: GM doesn’t have to take all the intellectual property out of Opel and move it elsewhere. Already done. Opel’s IP has been sold to a General Motors company, conveniently located in Delaware. Opel and any other GM companies pay license fees for their use. A common tax dodge, used to run up costs and to expatriate money without paying taxes in a high tax country such as Germany. Stripping Opel of assets and then taking Opel BK? Dangerous if done in Germany. You can go to jail for it.

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="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Fred schumacher Fred schumacher on Feb 10, 2010

    This is an example of being caught between a rock and a hard place. GM needs Opel to develop the smaller cars for GM's American operations, which is why GM decided it couldn't sell off Opel, but GM has no money and can't afford to invest enough out of its own pocket to save Opel. Meanwhile, Germany and the U.S. have very different operating modes vis a vis manufacturing management/labor cooperation. Germany prioritizes retention of manufacturing jobs, whereas the U.S. lets them leave the country. American business has an adversarial relationship with labor, whereas in Germany the two work together in partnership. It's culture clash and the realities of the world's first Great Recession. Best to leave one's options open and not take hard positions that will be regretted later.

  • Steven02 Steven02 on Feb 10, 2010

    If everything is licensed, I am betting the licenses aren't transferable with sale. Kind of like how you can't legally sell the license that came with your Windows XP cd. If this is the case, I could see Opel going down. The unions don't seem to want to work with Opel on this. Opel needs concessions and job cuts. While it is a hard pill for the unions to swallow, this is what needs to happen. I also don't think the size of VW is going to matter here. If the jobs are lost, they aren't likely coming back. The white collar jobs will be gone. The blue collar jobs will likely show up in places like Turkey. If I was VW, and needed to increase production because Opel is going under, I am not expanding production in the high dollar labor markets.

  • ToolGuy Ford is good at drifting all right... 😉
  • Dave Holzman A design award for the Prius?!!! Yes, the Prius is a great looking car, but the visibility is terrible from what I've read, notably Consumer Reports. Bad visibility is a dangerous, and very annoying design flaw.
  • Wjtinfwb I've owned multiple Mustang's, none perfect, all an absolute riot. My '85 GT with a big Holley 4 barrel and factory tube header manifolds was a screaming deal in its day and loved to rev. I replaced it with an '88 5.0 Convertible and added a Supercharger. Speed for days, handling... present. Brakes, ummm. But I couldn't kill it and it embarrassed a lot of much more expensive machinery. A '13 Boss 302 in Gotta Have It Green was a subtle as a sledgehammer, open up the exhaust cut outs and every day was Days of Thunder. I miss them all. They've gotten too expensive and too plush, I think, wish they'd go back to a LX version, ditch all the digital crap, cloth interior and just the Handling package as an add on. Keep it under 40k and give todays kids an alternative to a Civic or WRX.
  • Jpolicke In a communist dictatorship, there isn't much export activity that the government isn't aware of. That being the case, if the PRC wanted to, they could cut the flow of fentanyl down to a trickle. Since that isn't happening, I therefore assume Xi Jinping doesn't want it cut. China needs to feel the consequences for knowingly poisoning other countries' citizens.
  • El scotto Oh, ye nattering nabobs of negativism! Think of countries like restaurants. Our neighbors to the north and south are almost as good and the service is fantastic. They're awfully close to being as good as the US. Oh the Europeans are interesting and quaint but you really only go there a few times a year. Gents, the US is simply the hottest restaurant in town. Have to stand in line to get in? Of course. Can you hand out bribes to get in quicker? Of course. Suppliers and employees? Only the best on a constant basis.Did I mention there is a dress code? We strictly enforce it. Don't like it? Suck it.
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