• Nov 4, 2009
It was an exhausting 7-month process that finally winnowed down a pool of suitors for Opel, General Motors' European subsidiary, to Canadian parts maker Magna and Russian bank Sberbank. The deal was all set to go through, but GM pulled the plug yesterday at the 11th hour, claiming that because of Europe's improving markets and its own better-than-expected financial footing, the automaker could do better for Opel and employees than any of its proposed buyers.

Not so says government officials in Germany, who are reportedly crying in their steins and cursing the day Fritz Henderson was born (we're guessing). Of course, there's money involved, but GM has vowed to pay back the €1.5 billion bridge loan it received from the German government to keep Opel afloat during the selling process. It reportedly only borrowed €1.1 billion and has already paid back €200 million, so Germany is still owed about €900 million.

Aside from the money, German officials and Opel employees in the country are concerned that there will be more job cuts and plant closings by GM than there would have been if the company had been sold to Magna. As such, some of the unions in Germany that had agreed to concessions in order to woo Magna into ownership have vowed not to extend those same concessions to GM.

Outside of Germany, however, GM Europe workers are reportedly happy with the decision to keep Opel in the family fold. Their jubilation stems from fear that had Germany succeeded in brokering the sale of Opel to Magna, other countries like the UK, Spain and Belgium would bear the brunt of restructuring instead of Deutschland. This way, GM is more likely to evenly spread out the costs of restructuring, including job loss, without one region being able to exert too much influence.

[Source: The Detroit News, Automotive News - sub. req'd | Photo by TORSTEN SILZ/AFP/Getty]


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  • 23 Comments
      • 5 Years Ago
      Just to put the record straight: workers outside Germany aren't very happy at all with staying in the GM-group. For months now people working in Opel-factories in Europe aren't sure what the outcome of this soap will be.

      At the beginning of the year it seemed like GM would go broke and would have to close down plants in Europe. Than there was a little light at the end of the tunnel, when several parties were interesting in buying the GM-plants in Europe. Atleast this gave the workers an outcome and not all jobs (but still many - as much as 40%) would be lost.

      But now, after receiving government subsidies (which is a good thing imo because you cannot drop a big employer like that to the floor and lay off tens of thousands of workers from one day to another), GM decides to change the game again and keep Opel/Vauxhall afterall.

      Why?

      Because the automarktet seems to get in better shape again and smaller cars will be the next big thing. Smaller cars which can be found mainly in European plants. So what GM actually is doing, is using the money to save their group, to come to Europe, take the interesting designs and technology (which ofcourse was theirs) and meanwhile shut down remaining plants.

      Result?

      Ten of thousands (if not hundreds of thousands when you count the supplying businesses) will loose their jobs and their families will face dire times. Ofcourse you can say: "Eehhh... it's economics", but really, it's a social drama.

      If you ask me, there isn't much rejoicing to be done. It's a sad story really.

      So please, keep the ‘You go GM’ and the German government bashing behind. Atleast they did something to protect the jobs of the people which is certainly not what can be said about GM in this case.

      Btw: I’m not from Germany, I’m from Belgium and it’s very likely that the Antwerp GM-plant, which happens to be the most productive (and with highest labour cost) GM-plant in Europe, will totally shut down, leaving several thousands without a job.
      • 5 Years Ago
      I'm impressed by how the US govt involvement was much more long-sighted than the German govt. The Auto Task Force pushed the GM board to make tougher concessions to be viable, whereas the German case has just been about saving jobs and getting votes.
      • 5 Years Ago
      "Aside from the money, German officials and Opel employees in the country are concerned that there will be more job cuts and plant closings by GM than there would have been if the company had been sold to Magna. As such, some of the unions in Germany that had agreed to concessions in order to woo Magna into ownership have vowed not to extend those same concessions to GM."

      Can you say "self fulfilling prophecy," boys and girls? I knew you could.
      • 5 Years Ago
      that was supposed to be a response to jpm100. Stupid comments system.
        • 5 Years Ago
        whoops, I meant jonboy0706
      • 5 Years Ago
      Germany was hoist by their own petard. They could have let the deals go through on time if the most important thing to them was to get Opel out of GM hands. Now they have to deal with what they wrought.
      • 5 Years Ago
      Germany's interests were in protecting German jobs, nothing more. Magna made the best offer, with the least job cuts. GM agreed to a sale to Magna, and has now backed out?

      That is just bad business.

      The US government has given 50 billion dollars to GM, now GM is using taxpayers' money to keep a German company that will most likely require huge amounts of money pumped into it.

      I'm going to have to side with Magna and Germany on this one...talk about business ethics!
        • 5 Years Ago
        If GM is no longer burning cash, as alluded to in the article, then a fire sale on Opel is not in GM or the US taxpayer's best interest.
        • 5 Years Ago
        Just a thought - where do you think the engineering for the new Lacrosse was done? Especially since it's a redone Opel Insignia? Obviously, GM wants to keep that expertise in the family.
      • 5 Years Ago
      If germany dislikes it so much. They should just offer GM some serious cash to buy opel. GM said they want to keep opel. If germany were to put together a deal with enough money GM would likely take the money and run.
      • 5 Years Ago
      GM, very bad taste!
      • 5 Years Ago
      You go GM!
        • 5 Years Ago
        That's what Germany gets for being too greedy and big brotherly in this whole issue! If GM really has to regain its dominance again, it can't afford to lose a fundamentally and strategically strong company like Opel... All the Best GM!
        • 5 Years Ago
        Get ready for OPC Buicks in the USA!!!!
      • 5 Years Ago
      There's a big difference. The U.S. Govt owns a portion of GM. Germany merely made them a loan on the condition that they evaluate the sale of Opel. And if the buyer just happened to be German, they would be willing to float more money to help with the sale. GM evaluated selling Opel and decided it was not a good move. Germany can bitch and moan all they want, but in the end GM did what they were required to do.
      • 5 Years Ago
      Smart move if you want to be a global company. However where is GM getting €900 million? Oh yeah, I forgot the tax payer credit card.
      • 5 Years Ago
      The interrelationships of unions, government and business are such a complicated web that nothing happens. Welcome to a progressive world.
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