By on March 24, 2010

Opels head shop steward Klaus Franz is mightily mad at Opel’s CEO Nick Reilly. Reilly told the London Times that the Ampera, Opel’s counterpart to the Volt, may be built in the Ellesmere Port plant in the UK:“The chances are quite good that the Ampera will come to Ellesmere Port as it is close in production terms to the Astra and will share many components,” Reilly said. In the meantime, Berlin cues Roberta Flack’s “Killing me softly” as a prelude for Opel’s funeral.

It’s a minefield out there, and Riley steps right in: According to the Times, “any commitment by Vauxhall to bring the Ampera to the UK will come with heavy caveats and pleas for further state subsidy. It has already received £270 million of loan guarantees from the Government to increase Astra production.”

Reilly is holding out for more money. For the Ampera to come to Britain, “the conditions must be favourable”, Mr Reilly said to the Times “If there is no incentivisation, you would be more likely to go where the incentives might be, like Spain or elsewhere.”

The Commissars in Brussels listen intently and are taking notes. They need every cent to save Greece and other Euro-threatening states. Reilly’s loose lips will save unnecessary expenses: State support in return for job guarantees are strictly verboten in the EU. The talk in the UK sounds as if someone tries to attract flak from the EU.

Franz noted that the Ampera had already “been promised to Premier Jürgen Rüttgers for Bochum.” Franz also complained that the Astra Sports Tourer, which was to be built in Opel’s main plant in Rüsselsheim, has been moved to Ellesmere Port. Franz reminds Reilly that the €300m of state aid from the U.K. is dependent on state aid from other countries, the most notable being Germany.

Today, it became clear that Germany won’t be spending any money anytime soon. The “Credit Guarantee Committee” (“Bürgschaftsausschuss”) of the German government convened today as planned. As previously leaked, the committee decided to decide nothing.

Most alarmingly (for Reilly,) the committee leaked today that there will be no decision before the election in North Rhine-Westphalia in early May, heard Das Autohaus. North Rhine-Westphalia is home to Opel’s Bochum plant, and with the elections gone, gone will be the last reason to spend any German tax payer money. We’ve said it before, we say it again: Everybody knows that Europe has overcapacity in cars. European car sales are back at carmageddon levels. With subsidies running out, it is a bloodbath in the making. Everybody knows it, nobody wants to be caught saying it: Any subsidized car that Opel sells is missing from the sales of other European car manufacturers, notably Volkswagen. Something, someone has to go. The most likely candidate? U.S. government owned, rattlesnake-killer led GM’s Opel.

Ho to get rid of Opel? Slowly.  “I prayed that he would finish, but he just kept right on.”

Dow Jones Germany reports that the German government has many “open questions about the Opel restructuring plan. As long as these ambiguities are not eliminated, there will be no government aid from Germany.”

The ambiguities are the old standbys: Inflated license fees, the possibility that German government money will seep in the direction of Detroit, the lack of concessions from the Opel employees, and GM’s financial contribution. While they are at it, the German government is accusing GM of creative accounting: The bridge loan that was extended by the German government and paid back last November is listed as GM’s restructuring contribution.

In other words, the answer from Berlin is:  Nein.

But nobody will give a clear “Nein” before the elections. Maybe not even after the elections. The German government simply has to play for time. Time is money. Eventually, Opel will run out of time and money and has to throw in the towel. Berlin would rather see GM give up. Driving someone to suicide is much more socially acceptable than outright murder.

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8 Comments on “Killing Me Softly: The Slow Death Of Opel...”

  • avatar

    I’m lost as to what’s the end game with all of this.

    1st GM wants Opel to rest next to Pontiac, then Ed comes in and gives it a stay of execution saying that their engineering is too important to the organization but offers no more money to help it survive.

    Then they offer up some cash to grease the wheels of the Euro Govt’s but it doesn’t seem to be helping.

    Does GM want/need Opel or not?

    • 0 avatar

      Good point. The money that supposedly “greased the wheels” turned out to be creative accounting. See revised text in story. They counted the repaid bridge loan. It more and more looks like GM either doesn’t have the money, or is so used to be on the public drip that they convinced themselves that European governments have to join the free Methadone distribution program. Especially the Germans are playing hardball.

  • avatar

    Just move all the production to the UK. Let the german government explain to Opel workers why they are out of work.

    • 0 avatar

      Germany is their largest market. Almost all suppliers are in Euro land. Producing in the UK and exporting to Euro land is troublesome due to currency exchange.

      If Germany kept Opel alive, at some point they had to explain to the VW workers why they are out of a job. The issue of overcapacity has been discussed here many times.

      either way, Opel is finished. No new products, no margins, no brand equity. Government subsidies just prolong the process and cause more victims among other companies. You can’t beat reality, not on the long run.

    • 0 avatar

      Great idea, Jimboy. Reilly would do it in a heartbeat. After China, and now Germany, he’d finally live in a country where everybody would speak his language. All it would need are maybe some €10b to €20b to move the whole shebang to the UK. The UK would gladly give him the money. They are just dying to buy themselves another British Leyland – no?

  • avatar

    Keep Opel as a design/engineering lead for GM europe, cut production back to reflect the real market. Opel becomes more of a specialty market product that feeds Europe, UK, and the US, maybe some Asian markets as well, something like Lotus is now. The UK could certainly handle both lhd and rhd models with reduced production numbers. Altho I do agree Bertel, the Brit’s reputation for shoddy workmanship would have to be addressed.

  • avatar
    Tricky Dicky

    The UK gov’t have played clever on this one. With a General Election less than 6 weeks away, they’ve created the impression that they are willing to fight to guarantee UK jobs and attract new technology into the UK, but without spending a penny. By making their aid conditional, they’ve got a huge get out of jail card.

    Also, if anyone’s noticed, in the last few weeks Ford and Nissan have announced significant new manufacturing projects in the UK. Previously it looked like the manufacturing side of the auto-industry was doomed there. Now it seems that people have taken a view on the long term strength of the Pound versus the Euro and have concluded that the UK is now one of the cheaper places to make cars in western europe.

    However, this is no way will compensate for the lack of oxygen being granted to Opel. The WSJ reported on 26th Feb that Opel have liquidity to get them through 1st half of 2010. So if there is no decision prior to the North Rhine-Westphalia election in early May, that gives a window of a few weeks to rescue Opel.

    GM are going to have to make their minds up PDQ if they think this business is worth saving because right now, they are headed for the plug hole in the bath.

    • 0 avatar

      Except that you don’t want to produce in a country with a strong currency. You want a weak currency. Compared to 2007, the Pound is still relatively weak against the EUR. Recent Greece-induced fluctuations of the EUR haven’t done much, in the grand scheme of things.

      If you want to produce in Europe for Europe, you want to produce in a Euro zone country to completely eliminate the vagaries of exchange rates, and you want to produce in a low wage country. Eastern Europe currently best for new setups. If you think the pound will remain weak against the EUR (it looks like it could get weaker once the Club Med troubles are addressed, and the EUR goes up again,) then the UK is not a bad place to produce. But it remains a currency bet. Never good for the long term.

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