Opel makes case for German bailout

Opel makes case for German bailout
Photo: DPA
Opel lobbied German authorities on Monday for state aid, arguing the struggling car maker could stand on its own feet despite the problems of its US parent company General Motors.

Opel leaders were in Berlin to argue their case with Economy Minister Karl-Theodor zu Guttenberg, and present him with a restructuring proposal that includes €3.3 billion ($4.2 billion) in public aid.

Not all of the aid would come from Germany, but the minister nonetheless remained cautious, saying after the meeting that “there are still a lot of unanswered questions.”

German authorities would “carefully study the project” and pursue talks on the matter, including with the US government, zu Guttenberg added. He is to visit the United States in two weeks, but Berlin also has an eye on the German general election to be held in September.

In addition to the public aid, Opel’s proposal to turn the company around that was approved Friday by the supervisory board foresees greater autonomy for the German car maker from its US parent.

A spokesman for the German government said Monday that a major concern for Berlin was ensuring that German taxpayers’ money did not got towards saving jobs in the United States.

Although Opel has been a German industrial icon since the 19th century, it was bought by GM in 1929, the year the Great Depression began. Opel is “very strongly integrated into GM,” a spokesman said. It is wholly owned by the US group and does not publish separate annual results, he added.

Members of the IG Metall trade union have claimed Opel does not even have a bank account, which the company disputes.

“Of course Opel has accounts but it is true that its refinancing is done completely via GM,” the spokesman told AFP.

According to press reports, GM took Opel patents two years ago, placed them with a subsidiary in the United States, GM GTO, and now forces Opel to pay a license fee.

Officially, Opel declines to comment, and while the spokesman said it “had complete access to all patents,” he did not provide details on conditions for that access.

GM has three research and development centres, with one at Opel headquarters in Ruesselsheim, near Frankfurt, that is in charge of small- and medium-sized vehicles for the entire group. The centre employs 6,500 people and is deemed to hold more promise for GM’s future than those that work on bigger models which consume more fuel and emit more pollution.

Opel is also a leading force in GM’s research into electric cars, one of which, the Ampera, will be presented this week at the Geneva auto show. In addition to work being done in Germany, the spokesman said that GM’s US-based electric car research is directed “by an engineer from Rüsselsheim.”

Such close integration makes it impossible to completely separate Opel from the US group, management and unions agree.

On its own, Opel is also too small to survive, BHF-Bank analyst Albrecht Denninghoff told AFP.

“There could be a legal separation, in order to obtain subsidies,” but no more than that, he said.

In the next few weeks, therefore, authorities must come up with a suitable judicial framework and define the conditions under which Opel could gain its autonomy.

More than 26,000 jobs are directly at stake in Germany, in addition to those at parts suppliers. Opel also operates plants in Belgium, Britain and Spain.

The head of GM Europe, Carl-Peter Forster, has said the group “will ask other countries, in which we have significant activities, to contribute” to the rescue package.

Government spokesman Ulrich Wilhelm told a news conference on Monday that a decision to assist Opel would have to be approved by European Union competition regulators in Brussels.

“It is our aim to deal with this quickly and properly,” Wilhelm said. “At the end of the day what is at stake here is the fate of several thousand people.”

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