Germany May Pull Back Help for GM Opel
What to do about Opel? It is a question that has plagued both the German government and parent company General Motors for much of the past year. And with GM now touring Europe hat in hand, asking for financial support, an end to the saga remains over the horizon.
GM has, however, also brought along a few goodies to distribute among those whose help the company requires. On Tuesday, Nick Reilly, who currently heads GM's European operations—which includes both Opel and Vauxhall—promised Germany that GM's restructuring plan calls for the Opel factory in Bochum to remain in place, countering speculation that the facility was on the chopping block.
Speaking to the press following a meeting with Governor Jürgen Rüttgers of North Rhine-Westphalia, Reilly said: "Bochum remains an important part of the resources of General Motors in Europe going forward."
Hat in Hand
Reilly did not offer further details. Indeed, even as he is testing the waters when it comes to possible government aid for the company, GM's plan for restructuring Opel has remained under wraps. Reilly said that "our people and our union colleagues" would be told on Wednesday but gave no indication as to when the plan would be made public, saying only it "will be released relatively shortly."
An important pillar of that plan, however, has already been made clear: European taxpayers are to fork out for GM's European operations. Reilly said on Monday that it would be "quite difficult" for GM to come up with much of the funding because of ongoing restructuring in the U.S. "We are looking for the support of any government that feels willing to be able to provide us some financing support in the medium term," he told reporters after speaking with representatives from those European Union countries where GM has plants. GM is hoping that EU governments will cough up most of the €3.3 billion ($4.9 billion) necessary.
But European willingness to prop up GM on the continent may have waned in recent months. Germany certainly is in no mood to rush into another deal with GM, having been left at the altar earlier this fall when GM backed out of a German-brokered deal to sell Opel to a consortium made up of the Canadian auto-parts manufacturer Magna (MGA) and the Russian bank Sberbank (SBER.RTS). Germany offered €4.5 billion in loan guarantees and a bridge loan to make that deal happen, but GM unexpectedly changed its mind.
Now, with the liberal Free Democrats having replaced the center-left Social Democrats as Chancellor Angela Merkel's junior coalition partners, Berlin is also singing a different tune. Economics Minister Rainer Brüderle, of the Free Democrats, said on Monday "we do not see that the German taxpayer is prepared to be the rich uncle." Speaking to German public broadcaster ARD, he also said that any subsidies for GM might breach European Union rules. The European countries involved—Belgium, Britain, Poland, Spain and Sweden in addition to Germany—agreed not to speak with GM about possible aid until Dec. 4, by which time they will have had an opportunity to go over GM's restructuring plan.
Earlier this year, Germany did loan Opel—which employs 45,000 people in Europe, including 25,000 in Germany—€1.2 billion to save it from bankruptcy. According to a Dow Jones report on Tuesday, GM has now handed over the last repayment of €400 million to the German government.