GM abandons plans for Opel sale to Magna

US automakers General Motors on Tuesday scrapped an on-again, off-again plan to sell its big European division, Opel, which had triggered a political and diplomatic controversy.

GM abandons plans for Opel sale to Magna
Photo: DPA

The surprise announcement by GM on Tuesday dealt a blow to German Chancellor Angela Merkel as she visited Washington after having backed the move to sell Opel to a venture led by Canada’s Magna as the best way of saving jobs in Germany.

Berlin reacted with dismay and Merkel has asked that her cabinet meet on Wednesday.

“The German government regrets the decision,” government spokesman Ulrich Wilhelm said in a statement.

Merkel’s government had backed Magna’s offer as embodying the best future for 25,000 workers on German territory.

German Economy Minister Rainer Brüderle called GM’s U-turn “totally unacceptable” on Wednesday ahead of a cabinet meeting in Berlin.

Brüderle said Berlin urgently wanted to see GM’s restructuring plan, adding that the company needed the support of the workers if they wanted the firm to recover.

“This is unacceptable for the employees eight weeks before Christmas,” he said.

Roland Koch, head of the Hesse regional government, where Opel has its biggest plant, said he was “shocked and at the same time angry that the months-long efforts to find the best possible solution for Opel have failed at GM.”

The company said its board made the decision because of “an improving business environment for GM over the past few months, and the importance of Opel/Vauxhall to GM’s global strategy.” Britain has 4,700 workers at two plants at Opel’s Vauxhall operations.

The GM board “has decided to retain Opel and will initiate a restructuring of its European operations in earnest,” GM said in a statement.

The announcement was the latest twist in a saga that has led to months of uncertainty for Opel after its struggling US parent company underwent a government-backed bankruptcy reorganization.

The European unit, which was to be shed under the plan, turned into a major controversy as governments in Europe and the United States clashed over which portions of the automaker would be saved and what types of aid would be offered.

GM said it now believes keeping Opel and restructuring the European division itself would be the most cost-effective solution, noting it would soon present its restructuring plan to Germany and other governments.

“From the outset, our goal has been to secure the best long-term solution for our customers, employees, suppliers and dealers, which is reflected in the decision reached today,” said president and chief executive Fritz Henderson. “This was deemed to be the most stable and least costly approach for securing Opel/Vauxhall’s long-term future.”

Germany hoped GM would “strengthen the performance of the Opel unit,” and “limit the inevitable adaptations to the bare minimum” – a euphemism for job cuts, Wilhelm said.

But GM’s Henderson said the restructuring costs had been estimated at $4.4 billion, “significantly lower than all bids submitted as part of the investor solicitation.”

He vowed to work with European labour unions “to develop a plan for meaningful contributions to Opel’s restructuring.”

GM had given preliminary approval to plans to sell a 55 percent stake in German-based Opel to Canadian firm Magna and its Russian partner Sberbank.

Magna’s co-chief executive officer Siegfried Wolf, in a sober statement, said “we understand… it was in GM’s best interests to retain Opel.”

European Union regulators last month had cast doubt on the deal, saying there were “significant indications” that German aid of €4.5 billion for the deal had been proffered only if Magna and Sberbank won the bid, which had been bitterly contested.

The latest news was unlikely to end the polemic. Reiner Einenkel, works committee chief at Opel’s factory in Bochum, Germany, said GM’s decision created “a difficult situation for employees.”

“GM needs money to keep Opel running and we’ll make sure the government provides the means to protect Opel facilities,” he told AFP.

GM’s announcement came just as Merkel left Washington, where she held talks with President Barack Obama and addressed the US Congress.

The saga has dragged on since February, with the fate of at least 10,500 of GM Europe’s workforce of around 50,000 hanging in the balance. That is the number of jobs Magna said it would cut, while GM is believed to eliminate more as part of its restructuring.

GM’s finances since its bankruptcy reorganization have not yet been reported. But on Tuesday it said US sales were 177,603 new vehicles in October, up four percent from a year ago, the company’s first year-over-year gain since January 2008.

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Sleep, seaside, potato soup: What will Merkel do next?

 After 16 years in charge of Europe's biggest economy, the first thing Angela Merkel wants to do when she retires from politics is take "a little nap". But what about after that?

Outgoing German Chancellor Angela Merkel briefly closes her eyes and smiles at a 2018 press conference in Berlin.
Outgoing German Chancellor Angela Merkel briefly closes her eyes at a 2018 press conference in Berlin. Aside from plans to take "a little nap" after retiring this week, she hasn't given much away about what she might do next. Tobias SCHWARZ / AFP

The veteran chancellor has been tight-lipped about what she will do after handing over the reins to her successor Olaf Scholz on December 8th.

During her four terms in office, 67-year-old Merkel was often described as the most powerful woman in the world — but she hinted recently that she will not miss being in charge.

“I will understand very quickly that all this is now someone else’s responsibility. And I think I’m going to like that situation a lot,” she said during a trip to Washington this summer.

Famous for her stamina and her ability to remain fresh after all-night meetings, Merkel once said she can store sleep like a camel stores water.

But when asked about her retirement in Washington, she replied: “Maybe I’ll try to read something, then my eyes will start to close because I’m tired, so I’ll take a little nap, and then we’ll see where I show up.”

READ ALSO: ‘Eternal’ chancellor: Germany’s Merkel to hand over power
READ ALSO: The Merkel-Raute: How a hand gesture became a brand

‘See what happens’
First elected as an MP in 1990, just after German reunification, Merkel recently suggested she had never had time to stop and reflect on what else she might like to do.

“I have never had a normal working day and… I have naturally stopped asking myself what interests me most outside politics,” she told an audience during a joint interview with Nigerian writer Chimamanda Ngozi Adichie.

“As I have reached the age of 67, I don’t have an infinite amount of time left. This means that I want to think carefully about what I want to do in the next phase of my life,” she said.

“Do I want to write, do I want to speak, do I want to go hiking, do I want to stay at home, do I want to see the world? I’ve decided to just do nothing to begin with and see what happens.”

Merkel’s predecessors have not stayed quiet for long. Helmut Schmidt, who left the chancellery in 1982, became co-editor of the weekly newspaper Die Zeit and a popular commentator on political life.

Helmut Kohl set up his own consultancy firm and Gerhard Schroeder became a lobbyist, taking a controversial position as chairman of the board of the Russian oil giant Rosneft.

German writer David Safier has imagined a more eccentric future for Merkel, penning a crime novel called Miss Merkel: Mord in der Uckermark  that sees her tempted out of retirement to investigate a mysterious murder.

German Chancellor Angela Merkel forms her trademark hand gesture, the so-called “Merkel-Raute” (known in English as the Merkel rhombus, Merkel diamond or Triangle of Power). (Photo by Tobias SCHWARZ / AFP)

Planting vegetables
Merkel may wish to spend more time with her husband Joachim Sauer in Hohenwalde, near Templin in the former East Germany where she grew up, and where she has a holiday home that she retreats to when she’s weary.

Among the leisure activities she may undertake there is vegetable, and especially, potato planting, something that she once told Bunte magazine in an interview in 2013 that she enjoyed doing.

She is also known to be a fan of the volcanic island of D’Ischia, especially the remote seaside village of Sant’Angelo.

Merkel was captured on a smartphone video this week browsing the footwear in a Berlin sportswear store, leading to speculation that she may be planning something active.

Or the former scientist could embark on a speaking tour of the countless universities from Seoul to Tel Aviv that have awarded her honorary doctorates.

Merkel is set to receive a monthly pension of around 15,000 euros ($16,900) in her retirement, according to a calculation by the German Taxpayers’ Association.

But she has never been one for lavish spending, living in a fourth-floor apartment in Berlin and often doing her own grocery shopping.

In 2014, she even took Chinese Premier Li Keqiang to her favourite supermarket in Berlin after a bilateral meeting.

So perhaps she will simply spend some quiet nights in sipping her beloved white wine and whipping up the dish she once declared as her favourite, a “really good potato soup”.