Say brother, can you spare a billion?

In the latest dispatch of Portnoy’s Stammtisch, The Local’s column about life in Germany, Portnoy explains why carmaker Opel deserves to be bailed out – but other Teutonic firms don’t.

Say brother, can you spare a billion?
Photo: DPA

The global economic crisis and bad management have put two of Germany’s biggest automotive companies – Opel and Schaeffler – on an Autobahn to destruction.

While Chancellor Angela Merkel appears to be trapped in their headlights, her blue-blooded wunderkind – Economy Minister Karl-Theodor zu Guttenberg – has to decide who gets a taxpayer-funded lifeline and who gets sent down Insolvency River.

Though the two cases might seem similar – one company makes cars and the other parts for cars – there are a number of compelling reasons for bailing out Opel and just as many for ignoring Schaeffler’s pleas for help.

For the uninitiated, Opel is a subsidiary of General Motors Corp., a US carmaker that may or may not survive the next few months. GM’s troubles are threatening to take its German unit down with it and Opel executives, unions and workers want the German government to help.

Merkel’s conservative Christian Democrats are sceptical, saying Opel may no longer be a viable company – but her coalition partners, the centre-left Social Democrats (SPD), for the most part think Berlin should pony up a several billion euros to help make Opel a sustainable and independent German carmaker.

At the risk of sounding like I’ve become an anti-American pinko interested only in saving a bloated Teutonic company from Detroit’s evil clutches, the conservatives have got this one wrong and the SPD is right.

In addition to an apathetic, distant Yankee parent, Opel’s real problems became embarrassingly apparent last week when its managers reportedly handed over a hackneyed, poorly developed rescue plan to German politicians. The best Opel executives could do when the pressure was on and billions in government aid were at stake was to hand over a piecemeal, half-English document full of marketing half-truths and advertisements? That’s leadership? No wonder Opel’s in trouble.

But that’s also the reason the once proud German automaker may be able to make a go of it on its own – despite the apparent lack of brainpower at the top, the company was still able to peddle 1.5 million cars last year. That’s about the size of France’s Renault and slightly smaller than Italy’s Fiat – which are certainly both viable companies. Imagine how Opel could do with some quality management detached from the woes of woeful GM.

And that’s not the only reason Opel deserves taxpayer billions – there are more than 25,000 Opel workers in Germany. If Opel goes under, these people will immediately join the government payroll (read dole), probably until they die. I’d much rather give them some cash now in the hope that they don’t become a permanent drain on my already heavily taxed paycheque. Heck, I might even buy some Opel stock if it ever became publicly traded.

Now, the critics are already whining that government intervention would artificially influence competition, but such complaints have little merit to anyone in the know.

Lower Saxony already owns 20 percent of Opel rival Volkswagen to make sure the state has at least some leverage on the state’s biggest employer. So why can’t Berlin (or Hesse or North Rhine-Westphalia) hold 20 percent of Opel? Ideally, if the company survives, some day the state and federal governments holding shares of Opel can sell at a profit.

It might seem that this logic should also apply to Schaeffler, essentially a ball-bearing maker that is now wrestling with something like €12 billion in debt. It collected the liabilities as part of an ill-advised takeover of Continental, which makes car brakes and tires. But unlike Opel, these businesses themselves don’t actually need the government’s help to survive. Rather the billionaire family Schaeffler needs a helping hand from the state to make sure they remain in control of the companies. In other words, the government should help them clean up a mess of their own making.

But why should Berlin do that?

My ideas for Schaeffler aren’t anything revolutionary or new, they’re actually what’s in the works. The same banks that egged faux-countess Maria-Elisabeth Schaeffler to buy Continental and loaned her all that money are about to pull in the collateral and take control of both Schaeffler and Continental.

Which is exactly what should happen – Schaeffler and her son don’t deserve any help for making such a sophomoric business decision and the banks need to suffer too. If they take over the companies, rather than interest payments they’ll now have to wait for markets to recover to recoup their costs – proving that they never should have supported the deal in the first place.

And once the ownership of Continental and Schaeffler is settled, these two mostly healthy companies can focus on what they should be focusing on – adjusting to the new economic situation and, hopefully, negotiating car parts contracts with a newly independent Opel.


From lizards to water, eco-bumps snag Tesla’s giant Berlin car factory

In the green forest outside Berlin, a David and Goliath-style battle is playing out between electric carmaker Tesla and environmental campaigners who want to stop its planned "gigafactory".

From lizards to water, eco-bumps snag Tesla's giant Berlin car factory
Tesla's gigafactory outside the doors of Berlin. dpa-Zentralbild | Patrick Pleul

“When I saw on TV that the Tesla factory was going to be built here, I couldn’t believe it,” said Steffen Schorch, driving his trusty German-made car.

The 60-year-old from Erkner village in the Berlin commuter belt has become one of the faces of the fight against the US auto giant’s first European factory, due to open in the Brandenburg region near Berlin in July.

“Tesla needs far too much water, and the region does not have this water,” said the environmental activist, a local representative of the Nabu ecologist campaign group.

Announced in November 2019, Tesla’s gigafactory project was warmly welcomed as an endorsement of the “Made in Germany” quality mark – but was immediately met with opposition from local residents.

Demonstrations, legal action, open letters – residents have done everything in their power to delay the project, supported by powerful
environmental campaign groups Nabu and Gruene Liga.

Tesla was forced to temporarily suspend forest clearing last year after campaigners won an injunction over threats to the habitats of resident lizards and snakes during their winter slumber.

READ MORE: Is Germany’s Volkswagen becoming ‘the new Tesla’ as it ramps up e-vehicle production?

And now they have focused their attention on water consumption – which could reach up to 3.6 million cubic metres a year, or around 30 percent of the region’s available supply, according to the ZDF public broadcaster.

The extra demand could place a huge burden on a region already affected by water shortages and hit by summer droughts for the past three years.

Local residents and environmentalists are also concerned about the impact on the wetlands, an important source of biodiversity in the region.

Tesla Street

“The water situation is bad, and will get worse,” Heiko Baschin, a spokesman for the neighbourhood association IG Freienbrink, told AFP.

Brandenburg’s environment minister Axel Vogel sought to play down the issue, saying in March that “capacity has not been exceeded for now”.

But the authorities admit that “the impact of droughts is significant” and have set up a working group to examine the issue in the long term.

The gigafactory is set to sprawl over 300 hectares – equivalent to approximately 560 football fields – southwest of the German capital.

Tesla is aiming to produce 500,000 electric vehicles a year at the plant, which will also be home to “the largest battery factory in the world”,
according to group boss Elon Musk.

In a little over a year and a half, swathes of coniferous forest have already been cleared to make way for vast concrete rectangles on a red earth base, accessed via the already iconic Tesla Strasse (Tesla Street).

German bureaucracy

The new site still has only provisional construction permits, but Tesla has been authorised by local officials to begin work at its own risk.

Final approval depends on an assessment of the project’s environmental impact – including the issue of water.

In theory, if approval is not granted, Tesla will have to dismantle the entire complex at its own expense.

But “pressure is being exerted (on the regulatory authorities), linked to Tesla’s significant investment”, Gruene Liga’s Michael Greschow told AFP.

In early April, Tesla said it was “irritated” by the slow pace of German bureaucracy, calling for exceptions to the rules for projects that help the environment.

Economy Minister Peter Altmaier agreed in April that his government “had not done enough” to reduce bureaucracy, lauding the gigafactory as a “very important project”.

Despite Germany’s reputation for efficiency, major infrastructure projects are often held up by bureaucracy criticised as excessive by the business community.

Among the most embarrassing examples are Berlin’s new airport which opened last October after an eight-year delay and Stuttgart’s new train station, which has been under construction since 2010.

Brandenburg’s economy minister, Joerg Steinbach, raised the possibility in February that the Tesla factory could be delayed beyond its July planned opening for the same reason.

SEE ALSO: Tesla advertises over 300 jobs for new Gigafactory near Berlin