November 20, 2009
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.
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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:
Part of the problem, which the German side won't talk about, is that Opel's sales aren't as strong as their production capacity, but the German labor restrictions are so strong, they won't allow a company to adapt to changes like this, and account for increased competition and distribution of sales across competitors.
The bottom line on this is the Germans had the opportunity to release Opel from American control, yet they let the deal sit and fester until it was pulled off the table, which is how business is and should be done. They lost their opportunity, plain and simple. However, I know the German side will spin this to generate anti-American sentiment, rather than admit their own fault in this to their own people.
Why shouldn't the parent money be able to take the money generated by a subsidiary? The Germans' problem is they look at Opel as a single entity, while Opel is part of a giant corporation they sold it to in 1929. The average German still seems to try and apply the single-entity thinking to Opel, when it is a part of a whole corporation, so no doubt, as much as I don't care for GM and mismanagement, no heads rolled and no one went to prison, as pulling the money out of Opel to bring back to GM was fully legal. This fear that the German government are creating is unfounded, as it can be stipulated the money shall not leave this area. This is simply a matter of fear-mongering, posturing, and "razing the land", with respect to sealing the future of Opel with a damaged reputation.
I have not made an argument that GM wasn't incompetent, but additionally, you're speaking of Opel being run into the ground, which is far from the truth. Opel was running quite well, though with reduced buying of the product for some time as the economy went down and competition went up. Additionally, they had some ?3bn in cash reserve-so much for them being run into the ground. They don't have that cash now because it was sent back to GM in the US, as is rightfully allowed. 10000 employees is exactly the ratio for the 33% more capacity they have than sales, and I think it's fair, but as with everything in Germany, they want all or nothing, and will lose anyhow.
As far as Ford goes, you didn't make a convincing argument against the existence of anti-Americanism by only introducing their name. Unfortunately, I have some German classes, and this is one hot topic, along with reading the German papers and watching the news.
The issue with opel is on this side, too. Not just the highlighting of GM's problems on the other side of the world.
Why shouldn't the parent money be able to take the money generated by a subsidiary? The Germans' problem is they look at Opel as a single entity, while Opel is part of a giant corporation they sold it to in 1929. The average German still seems to try and apply the single-entity thinking to Opel, when it is a part of a whole corporation, so no doubt, as much as I don't care for GM and mismanagement, no heads rolled and no one went to prison, as pulling the money out of Opel to bring back to GM was fully legal. This fear that the German government are creating is unfounded, as it can be stipulated the money shall not leave this area. This is simply a matter of fear-mongering, posturing, and "razing the land", with respect to sealing the future of Opel with a damaged reputation.
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.
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?
http://www.nytimes.com/2009/11/09/world/europe/09iht-reunif.html?_r=1&hpw=&pagewanted=all
While the government shouted foul over G.M.?s change of heart after originally accepting the sale, two Germans who had been members of the Opel Trust, overseeing the company while it was seeking a buyer, described Berlin?s preference as entirely politicized. In Dirk Pfeil?s case, he clearly complained too much, and was fired. His apparent mistake was to detail how a ?4.5 billion state credit to Magna and its Russian partner would be spent:
?More than ?600 million were to be used for the modernization of the Russian automobile industry. That means the transfer to Russia of specialized German knowledge and, later, the destruction of jobs [in Germany]. Perhaps the reasons for this are based in foreign policy. Perhaps [they are] a counterpart to general agreements with Putin.?