By on May 21, 2012

A day before GM officially announced that the Astra production will be moved to Ellesmere Port, a move that is widely believed to seal the fate of Opel’s Bochum plant, we said that the decision won’t go down well in Germany, and that it will be very tough working with a doomed workforce. The workforce is already getting restive.

Opel’s works council chief Schäfer-Klug says he has evidence that the Ellesmere Port decision was bought with subsidies. According to EU law, subsidies are illegal, except under clearly defined circumstances. You may remember that it was the anti-subsidy rule that torpedoed GM’s plan back in 2009 to sell Opel jobs to the highest bidding country.

According to Automobilwoche [sub], members of the European Parliament already asked the European Commission to look into the matter, and that the Commission usually does not reject such a request.

UK business secretary Vince Cable denies that subsidies have been pledged. Opel also denies that subsidies were promised, but said that there are “a number of existing mechanisms in the UK for the support of the industry.”

One man’s subsidy is the other man’s support mechanism. We probably have not heard the last of this.

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8 Comments on “GM’s Ellesmere Port Decision Could Collide With EU Anti-Subsidy Rule...”

  • avatar
    Tom D.

    So, what exactly happens if an E.U. member state decides to ignore the rulings of the European Commission. This is not inteded to be an anti E.U. post, I’m just curious.

    • 0 avatar

      Countries do. Most notably Germany and France…..other countries have more difficult in getting away with it.
      I suppose that if the EC (which treats Germany as a darling child and the UK as an outsider) ruled it was illegal, then GM would either find a loophole (not difficult) or would have to find another reason to claim they’re choosing Ellesmere Port. They should have no difficulty – this is just a standard union response.

  • avatar
    The Doctor

    So what if the UK didn’t abide by EU rules? What exactly were the consequences of Germany violating the Stability & Growth Pact?

    Bugger-all as far as I can tell (apart from suggesting to Greece and Portugal that it was fine to run big deficits since the big boys do too…)

  • avatar

    Excuse my ignorance, but I thought the UK wasn’t in the EU. Or is it just that they don’t use euros?

    • 0 avatar

      10 of the 27 counties that are part of the EU continue to use their own currency.

      Czech Rep.
      United Kingdom

      Looks like it was a smart thing to do.

      • 0 avatar

        Well in some of the cases it wasn’t by choice, the UK and Denmark has an explicit exemption from joining the EMU, Sweden has no such exemption but has sort of exploited a Loop hole by not joining ERMII that is a prerequisite for joining the EMU. The other countries in general did not meat the prerequisites for membership but are now understandably weary about joining.

    • 0 avatar

      Well they are part of the EU, but not the Economic and Monetary Union (Even if they wanted to join now they couldn’t due to the deficit and debt, they did try in the early 90’s but where unable to maintain the required exchange rate) nor the Schengen Agreement (that’s now a part of the EU treaty) that allows passport free travel in the EU.
      Some people – let’s call them idiots, cause that’s what they are – would like the United Kingdom to leave the EU, prior to the Treaty of Lisbon (establishing the EU) this might have been feasible, seceding from the Union now would mean that the UK is treated like any foreign country, the implications for UK manufacturing and financial services would be “interesting” to say the least.

  • avatar

    So, another case of EU regulations applying only to the UK. Its pretty well established that Germany and France have been playing fast and loose with the subsidy regulations for years, especially in terms of keeping their domestic shipbuilding industries afloat. The UK was prohibited from extending financing arrangements to Harland & Wolf and Cammell Laird to go after commercial work, because the EU ruled that any business those shipyards lost would likely go to yards in Germany and France, and thus remain in the EU. France and Germany, on the other hand, are allowed to extend subsidies to STX and Meyer Werft because the EU ruled that any business THOSE yards lost would go outside the EU to Korea or Japan.

    Its part of why Britain has been disproportionately affected by post-industrialization, they’ve lost heavy industry at a much faster and more dramatic rate that any country on the continent, despite having a generally freer and more lightly regulated labor market and looser financing, which should theoretically make them more competitive.

    I suppose one way to look at it is that the British workers and labor unions won’t be as militant about protecting their jobs as the Germans, since the Brits are “used” to their plants being closed and are just sort of resigned to that sort of thing happening nowadays.

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