By on September 9, 2010

The best time to get concessions out of a company is before their IPO. It’s “how much for it to go away” time. The German metalworkers union must have had a crash course in pre-IPO maneuvering. The nagging Opel question was in the way of a successful offering. What GM needs is a solid restructuring plan for Opel. For that, they need the metalworkers. The metalworkers got themselves a deal.

GM’s board approved a restructuring plan for Opel. The deal (filling 150 pages) had been hashed out between management, unions, and labor representatives (which are not necessarily one and the same in Germany.)

This is what labor will get:

  • Job security through 2014
  • No more plant closures
  • A 3.75 percent share of the 2014 profit
  • A 7 to 8 percent share of the profits from 2015 on out
  • Investments into new models
  • Increased codetermination
  • Opel will be changed from a GmbH to an AG

This is what labor will give:

  • Salary concessions worth $337m  per year until 2014

That’s it. The salary concessions money will be deposited in an escrow account and can be returned to the workers, with interest, if the automaker does not implement planned projects.

To appreciate the change from a GmbH to an AG requires a little knowledge of German corporate arcana. A GmbH is something for a small business. A large company is usually an AG. The nice thing about a GmbH is that the stockholder (GM) can direct management what to do. With an AG, the stockholders (and labor) will sit on the supervisory board and will listen to management proposals. A supervisory board can say yes or no. But it cannot direct management what to do. At least in theory. Die Welt already headlines: “Opel wants more independence from GM.”

It had been a tough poker game between Nick Reilly and labor leader Klaus Franz. Looking over the list, Opel labor pretty much got all they wanted. A little extra urgency caused by the IPO surely helped.

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