Business & Money
Photo: DPA

Germans against offering aid to GM-owned Opel

Published: 8 Nov 09 11:16 CET
Online: http://www.thelocal.de/money/20091108-23103.html

After last week’s shock decision by General Motors to hold onto Opel rather than selling it to the Canadian company Magna, a new poll shows that a clear majority of Germans against offering aid to the company if it asks for state aid.

If General Motors asks the German government to offer loan guarantees to finance its planned €3 billion overhaul of the iconic carmaker, 66 percent of respondents to the poll, sponsored by the Bild am Sonntag newspaper, said they were against such aid. Just 28 percent said they favoured assistance.

GM is highly likely to ask Germany, as well as other European countries where Opel facilities are located, to help pay for the company’s reinvention, though the political winds in Germany in particular are blowing against it.

When news of GM’s decision broke last week, the newly sworn-in Economy Minister Rainer Brüderle said the move was “totally unacceptable” and has since said he is sceptical that Germany will offer additional assistance.

Opel is currently operating in a trusteeship set up by the German government in spring to help facilitate a quick sale to another company. The government also extended a €1.5 billion line of credit to keep the company solvent through the process.

Brüderle and many other German politicians have demanded that GM repay the credit - initially due to be repaid by the end of November - immediately now that it has decided to hold onto Opel.

GM’s restructuring plans are said to be similar to the one put forward by Magna and will entail approximately 10,000 layoffs throughout Europe out of a workforce of approximately 50,000. Unlike the Magna plan, which to satisfy the German government proposed closing none of Opel’s German facilities, GM is thought to plan the closure of at least one German site.

DPA/The Local (news@thelocal.de)

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Your comments about this article:

#1
12:49 November 8, 2009 by pepsionice
If I were the Germans....I'd reply "no", then hint that if you are financially able to run the company, then sell it. And if you are seriously in financial trouble....then view legal options to seize the company from the dimwits. These GM guys are showing a lack of intelligence, a lack of vision, and a lack of competence.
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#2
13:11 November 13, 2009 by jmjdk
If General Motors asks the German government to offer loan guarantees to finance its planned ?3 billion overhaul of the iconic carmaker, 66 percent …
GM?s restructuring plans are said to be similar to the one put forward by Magna and will entail approximately 10,000 layoffs throughout Europe out o…
The German government will make a huge payout either in helping GM or in paying the benefits (unemployment, retraining, etc.) to former/laid off employees of Opel.
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#3
13:21 November 13, 2009 by bal00
?3B = ?300,000 per job. And you don't even know whether that will actually be used for Opel or whether GM decides they could use the capital to design a few new Buicks.
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#4
15:52 November 13, 2009 by Oblomov
There wasn't any reputation left to damage. GM has run Opel into the ground for years. Incompetent companies aren't popular, irrelevant whether they are American or German. There is no comparable sentiment against Ford which makes your claim about anti Americanism rather moot.
Report abuse »
#5
17:08 November 13, 2009 by bal00
The problem with that thinking is exactly what the German government used to vilify GM, and it's nothing short of astounding, as German companies …
Actually it's a very valid concern. Of course GM can do whatever they like with their own capital, but they can't do whatever they like with government aid. You can stipulate that the money needs to stay with Opel, but that's completely unenforceable, because GM can simply move the money from one subsidiary to another by overcharging/underpaying Opel for products, intellectual property or services. That's what companies do all the time. Toyota Germany for example makes no profit at all. Why? Because they adjust the internal pricing so the company only breaks even, which enables them to book the profits in Japan and pay a (presumably) lower tax rate.

There are just two ways to make sure the money stays with Opel:

1) Have the government audit every single transaction between Opel and GMNA. That means check the price of every little brake caliper, light switch or control arm design Opel buys from GMNA (and vice versa).

2) Have two separate companies.
Report abuse »
#6
17:28 November 13, 2009 by bal00
I agree that posturing is an important aspect of it, but I disagree that the German government would be able to regulate the flow of money between GM and Opel without separating the two.

If GM tells Opel 'we'll be paying you $3M for this front control arm design', how would the German government determine whether that's a fair price or whether it's actually worth $10M and GM just quietly pulled $7M out of Opel?
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