German Water Torture: Stringing Opel Along
If anybody would offer me Nick Reilly’s job, I would scream. I don’t have the nerves the assignment takes. Yesterday, Opel made headlines for losing 51.5 percent in May. In today’s mass publication BILD Zeitung, there is even worse news:
“The decision about government aid for the ailing car manufacturer Opel has been delayed until the coming week.”
A meeting of the steering committee that was planned for today could not take place due to “scheduling difficulties.” A new meeting will “expectedly” take place in the coming week. Another committee (there is no shortage of committees in Berlin, only commitment is in short supply) had similar scheduling problems end of May.
According to Der Spiegel, “indications are mounting that the committee will deny aid.” They have an expert opinion from PriceWaterhouseCoopers that says that “General Motors has free liquidity between $16b and $17b.”
Message to GM: “Help yourself, or god help you.”
Whatever the commitment lacking committees may decide: The last word has Germany’s Economics Minister Brüderle. He’s a declared skeptic.
The true and final decision will be made by Brüderle’s boss, German Chancellor Angela Merkel. If politically expedient, she’ll approve the money. If not, she’ll use it for something else. The twentysomethingthousand lost jobs faze nobody. Germany has 3,242,000 jobless, 165,000 less than in the previous month. The sky won’t fall if Opel closes. Given the incredibly shrinking German car market, a little bloodletting may even help the German patient. Especially if the blood is spilled by an American company that had snubbed the Chancellor. Who drives a Golf at home.
There is no easier way to help the German car industry than to turn off Opel’s air supply. Totally EU compliant. No state aid to nobodoy. No sleazy job guarantees.
That “If Mrs. Merkel declines help, we will pay for it ourselves. Maybe this will make your chancellor happy” could haunt Whitacre. I bet it haunts Reilly every night and day.
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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Well done. At least GM cannot bully the German and Swedish governments the way they did with the Canadian government, which is spineless and just looks towards the U.S. for guidance. No tax-payer subsidies to a bankrupt company. Germans will not stand for it.
So what's the most likely scenario then?: 1) Opel don't get the money and go out of business OR 2) Opel don't get the money from any EU governments and GM has to do their best to fund them out of the available liquidity, meaning that Opel won't be able to reduce it's cost base as quickly as they would like, or to develop the desired new products in the optimal timeframes and consequently, bleed a little more market share/ fail to deliver proft in the medium term Not sure....