Le Bailout: Ford Is Against It

by Bertel Schmitt

Published: October 25th, 2012

Stephen Odell, CEO of Ford Europe, thinks that state aid of ailing carmakers is a dead-end street.

“I don’t think it’s sustainable for support from governments to keep competitive companies going forward, particularly in a protracted downsized economy.”

Odell also said that some automakers question the legality of Peugeot government bailout. Germany’s state of Lower Saxony, second largest Volkswagen shareholder, already announced steps against the bailout.

#BertelSchmitt #EU #Ford #France #LeBailout #PSA

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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11 comments

Tatracitroensaab on Oct 25, 2012

Do you guys think that the bailout will actually be approved? I'm guessing not, due to EU rules and whatnot. Ironic that "them socialist anti-capitalist europeans" wont do bailouts of their automakers due to competition rules ;)

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- Pch101 on Oct 25, 2012
  
  The Swedes threw money at Saab in an effort to get it sold off. The Germans were offering Magna cash and prizes to acquire Opel, until GM decided not to sell it. Everyone is self-interested in these situations. One minute, the Germans are putting together bailout packages for their own industries; the next, they're whining about it when their neighbors talk about doing the same thing. As I keep saying, the PSA-Opel merger is a great idea for these purposes. Use Opel to turn Peugeot into a German problem is a surefire way to get a deal done.
  
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- 28-Cars-Later on Oct 25, 2012
  
  @Pch101 "Use Opel to turn Peugeot into a German problem is a surefire way to get a deal done." Spot on!
  
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- Asdf on Oct 25, 2012
  
  @Pch101 "Use Opel to turn Peugeot into a German problem is a surefire way to get a deal done." And I thought the deal was a way for GM to turn Opel into Peugeot's problem... but then again, who knows these days...
  
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- Alluster on Oct 25, 2012
  
  The bailout is supposedly allowed, since it is for PSA's lending arm, Banque PSA Finance, and not their core automotive business. Complaints from VW/Ford not withstanding, the bailout will happen. We are talking about a company 16% larger than Honda. The rescue is inevitable with 210,000 global employees and 100,000 in France alone. Like PCH mentioned, I expect GM and PSA to create a separate JV unit combining Opel/Vauxall and Peugeot/Citroen. Now it can be Europe's problem. Without access to GM's $35B cash, this JV will either sink without taking the parent companies down, or will recover with the Govts and Unions coming in terms with reality and accepting job cuts. I think the JV plan will be kept under wraps until the bailout is received. The French govt is not going to bailout PSA, not when they have access to GM's $35B, nor are Opel's Unions agreeing to job cuts as long as GM continues to remain profitable as a whole. A JV leveraged equally between France and Germany is not going to face any issues gaining future aid if necessary. Opel, Vauxhall, Peugeot and Citroen can either sink or swim on their own.
  
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- John Rosevear on Oct 25, 2012
  
  @alluster Agreed. Spot on.
  
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- Sen Moloney on Oct 26, 2012
  
  @Pch101 "The Swedes threw money at Saab in an effort to get it sold off." Really? Because I remember that Sweden was one of the only countries that did not bail out its auto industry. The enterprise minister said something like GM was big enough to take care of itself and they would not loan them any money. Then when it looked like Saab was being wound down by GM there was public pressure for the government to buy Saab and the minister said something along the lines of the government will not own car companies. The only money Saab got (if I remember correctly) was from the EIB, and I think they had only used half of that money before they went bankrupt. The Swedish government guaranteed the loan and when Saab went bankrupt took ownership of Saab Automobile Parts, one of Saab's subsidiaries which it now owns and operates as a separate company.
  
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El scotto on Oct 25, 2012

I'm thinking huge "fuel economy/alternative energy" research grants. A massive EU boondoggle, all the car makers get to line up at the cash trough, and EU bureaucrats have employment. Oh wait, someone will have to pay for that.

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Robert.Walter on Oct 25, 2012

Doesn't the method work differently? Pay despite protests. Wait until Legal challenge is brought to EU commission. Wait until EU says loans were illegal and then recall payment. In the meantime buy the helped out company breathing space by slow walking the process and hoping the company can recover. I'm not sure the EU has to approve a loan program before the money is disbursed, but I could be wrong...

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Jim brewer on Oct 25, 2012

Well, of course the Germans are fairly hypocritical. As to Germany, the Euro is a cheap currency, giving them an unnatural advantage in their exports. If Germany still had the D-Mark they would be hurting cowboys too. Sure these things are unsustainable long-term. That's just a given. The real problem is the idiotic austerity policies of the EU countries which is giving them a double dip recession and making it so that nobody can afford a car.

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- Th009 on Oct 27, 2012
  
  ... whereas in the US everybody can afford a car. Because the deficit and the debt will crush your children and grandchildren, not you, after all. Yes, those Europeans are really stupid and thinking only short-term, aren't they?
  
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