Bloomberg
General Motors Co. must overcome resistance from German workers and politicians as it eliminates jobs to save the Adam Opel GmbH division from bankruptcy after calling off a planned sale to Magna International Inc.
The Detroit-based company’s board voted yesterday to keep Opel rather than sell a majority stake to Magna and Russian partner OAO Sberbank, reversing a September decision. Klaus Franz, Opel’s top labor leader, called it a “black day” and Roland Koch, the prime minister in Opel’s home state of Hesse, said he was “angry” and concerned about protecting jobs.
GM may need to trim about 10,000 jobs from Opel’s 50,000- strong workforce, persuade unions to agree to 265 million euros ($390 million) in concessions accepted under the failed Magna deal, and repay a 1.5 billion-euro loan from Germany. The automaker is still banking on European governments to fund a 3 billion-euro restructuring of Opel.
“Failure to reach the needed restructuring would result in the operation becoming insolvent, an unnecessary and undesirable outcome for all involved,” said Karin Kirchner, a spokeswoman for GM in Zurich. “The plan is to secure the bulk of financing from European loan guarantees,” she said, without giving details.
In canceling the sale to Aurora, Ontario-based Magna, GM’s board is seeking to rescue an unprofitable division that provides the company with critical small-car technology and a local presence in Europe.
‘Negative Experiences’
“In light of the negative experiences of past years with the corporate policy of GM, I have serious concerns about the future of the company and its jobs,” Hesse’s Koch, a senior member of Chancellor Angela Merkel’s CDU party, said today in a statement. About half of the Opel workforce is at four plants in Germany, while 5,000 people are employed by the manufacturer’s Vauxhall brand in the U.K.
Ulrich Wilhelm, a spokesman for Merkel, said the government regrets that GM decided against “the convincing industrial logic” of the Magna proposal. Germany wants GM to repay the 1.5 billion-euro emergency loan by the end of the month.
Opel employees will seek to “close ranks” with European governments, labor chief Franz said in a statement. Workers plan to stage warning strikes tomorrow and demanded the immediate payout of deferred wages.
‘Fewer Chances’
Without worker support and Magna’s assistance in technology development and expansion, Opel will “have fewer chances to survive,” Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen, said in a Bloomberg Television interview. “It’ll be a mess for General Motors.”
Magna’s proposal called for 4.5 billion euros in aid, which Germany had agreed to provide. Following concerns from the European Union, Germany told GM that the financial support wasn’t reserved solely for Magna, opening the door for GM to reconsider an agreement that would have left the U.S. automaker a 35 percent stake in Opel.
The Canadian auto-parts manufacturer’s proposal was more expensive than GM’s planned restructuring because it foresaw expanding Opel to Russia and other markets. Opel workers supported the deal, which offered them a 10 percent stake and the opportunity to take part in decisions.
Franz said that the Kaiserslautern and Bochum plants in Germany, with a combined 8,600 employees, could be closed under a GM restructuring plan. Magna, which was considering cutting 4,000 jobs in Germany, had planned to keep all four German plants in operation.
‘Delighted’ Britons
The German resistance contrasts with reaction in Britain, where workers called the decision “fantastic” and predicted fewer job cuts at English plants.
“I’m absolutely delighted with this news,” Tony Woodley, general secretary of Unite, Britain’s biggest trade union, said today in a statement. “It’s fantastic news for the U.K. and right that GM does not break up its family and retains ownership of Vauxhall.”
Spanish trade union CCOO said in an e-mailed statement that agreements reached with Magna to cut production and eliminate jobs are no longer valid.
Opel needs to eliminate about 10,000 jobs in order to cut capacity and become viable, Carl-Peter Forster, GM’s top executive in Europe, said yesterday in Berlin. The restructuring could include the closure of as many as three factories, with the Antwerp plant the most vulnerable, he said at an auto industry conference prior to GM’s decision.
Belgian Reaction
“General Motors has lost its credibility,” Eddy De Decker, an official at the ACV Metal union, said by telephone from Antwerp today.
“First they told us we could build the new Astra, then they promised us an SUV model as a replacement,” De Decker said. “The SUV production would eventually move to China and it’s no secret that Antwerp would close down under GM’s original restructuring plan.”
GM wanted to keep Opel but was restricted in devoting U.S. bailout money to operations overseas, said Mike Tyndall, a London-based automotive specialist at Nomura.
“The real clue was that RHJ was the preferred bidder, and RHJ was the one most likely to keep it intact, allowing GM to buy it back in the future,” he said.
Brussels-based RHJ International, which holds some former assets of Ripplewood Holdings LLC, the New York-based private equity firm started by Timothy C. Collins, made an offer for Opel that GM executives called “simpler” than Magna’s. RHJ said in October it was no longer interested in purchasing Opel.
GM Directors
GM’s board, changed since a U.S. rescue of the bankrupt company, cited an improving economy and the Opel brand’s strategic importance in setting aside the Magna agreement.
Retaining ownership of Ruesselsheim-based Opel marks the second shift in GM’s post-bankruptcy plan for unloading unprofitable divisions. GM said Sept. 30 it would wind down the Saturn brand after a sales agreement with retailer Penske Automotive Group Inc. fell through.
Fred Irwin, chairman of the trust created by the German government in June to supervise Opel, said in a statement that he hoped GM’s decision would lead to new business “stability” at the unit.
Thomas Schaefer, who represents Germany’s Opel manufacturing states in federal government-led talks with GM, said Germany expects the automaker to present its restructuring plan “very quickly.”
Government Aid
“No one can make any commitment on aid until the restructuring plan is available,” Schaefer, deputy finance minister of Hesse, said today in a phone interview.
Opel’s cash position has exceeded targets for the past few months, GM’s Forster said, declining to comment on when the carmaker might run out of money.
“Where GM is going to get the money to fund the Opel restructuring is still something of a mystery,” said Aaron Bragman, an analyst at IHS Global Insight. “But from a strategic standpoint, keeping Opel was the right thing.”
GM’s Kirchner said GM will pay back the German loan if asked and needs to complete financing “as soon as possible.”
Opel’s market share declined to 7.6 percent in the first nine months of 2009, compared with 8.0 percent a year earlier, according to figures from the European Automobile Manufacturers’ Association.
Consumers probably will shrug off the latest twist in the Opel saga, Jaap Timmer, chairman of the European Opel dealers’ association, said in a telephone interview.
Some Opel dealers were “shocked” by GM’s reversal, Timmer said. “The main consequences will be for the workers and the plants.”
Nomura’s Tyndall said GM’s change of heart is a good sign for the industry.
“It’s broadly positive because it reflects the rapid recovery that GM is seeing,” he said. “In terms of broad-brush sentiment, it means the auto industry is through the worst.”
The Detroit-based company’s board voted yesterday to keep Opel rather than sell a majority stake to Magna and Russian partner OAO Sberbank, reversing a September decision. Klaus Franz, Opel’s top labor leader, called it a “black day” and Roland Koch, the prime minister in Opel’s home state of Hesse, said he was “angry” and concerned about protecting jobs.
GM may need to trim about 10,000 jobs from Opel’s 50,000- strong workforce, persuade unions to agree to 265 million euros ($390 million) in concessions accepted under the failed Magna deal, and repay a 1.5 billion-euro loan from Germany. The automaker is still banking on European governments to fund a 3 billion-euro restructuring of Opel.
“Failure to reach the needed restructuring would result in the operation becoming insolvent, an unnecessary and undesirable outcome for all involved,” said Karin Kirchner, a spokeswoman for GM in Zurich. “The plan is to secure the bulk of financing from European loan guarantees,” she said, without giving details.
In canceling the sale to Aurora, Ontario-based Magna, GM’s board is seeking to rescue an unprofitable division that provides the company with critical small-car technology and a local presence in Europe.
‘Negative Experiences’
“In light of the negative experiences of past years with the corporate policy of GM, I have serious concerns about the future of the company and its jobs,” Hesse’s Koch, a senior member of Chancellor Angela Merkel’s CDU party, said today in a statement. About half of the Opel workforce is at four plants in Germany, while 5,000 people are employed by the manufacturer’s Vauxhall brand in the U.K.
Ulrich Wilhelm, a spokesman for Merkel, said the government regrets that GM decided against “the convincing industrial logic” of the Magna proposal. Germany wants GM to repay the 1.5 billion-euro emergency loan by the end of the month.
Opel employees will seek to “close ranks” with European governments, labor chief Franz said in a statement. Workers plan to stage warning strikes tomorrow and demanded the immediate payout of deferred wages.
‘Fewer Chances’
Without worker support and Magna’s assistance in technology development and expansion, Opel will “have fewer chances to survive,” Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen, said in a Bloomberg Television interview. “It’ll be a mess for General Motors.”
Magna’s proposal called for 4.5 billion euros in aid, which Germany had agreed to provide. Following concerns from the European Union, Germany told GM that the financial support wasn’t reserved solely for Magna, opening the door for GM to reconsider an agreement that would have left the U.S. automaker a 35 percent stake in Opel.
The Canadian auto-parts manufacturer’s proposal was more expensive than GM’s planned restructuring because it foresaw expanding Opel to Russia and other markets. Opel workers supported the deal, which offered them a 10 percent stake and the opportunity to take part in decisions.
Franz said that the Kaiserslautern and Bochum plants in Germany, with a combined 8,600 employees, could be closed under a GM restructuring plan. Magna, which was considering cutting 4,000 jobs in Germany, had planned to keep all four German plants in operation.
‘Delighted’ Britons
The German resistance contrasts with reaction in Britain, where workers called the decision “fantastic” and predicted fewer job cuts at English plants.
“I’m absolutely delighted with this news,” Tony Woodley, general secretary of Unite, Britain’s biggest trade union, said today in a statement. “It’s fantastic news for the U.K. and right that GM does not break up its family and retains ownership of Vauxhall.”
Spanish trade union CCOO said in an e-mailed statement that agreements reached with Magna to cut production and eliminate jobs are no longer valid.
Opel needs to eliminate about 10,000 jobs in order to cut capacity and become viable, Carl-Peter Forster, GM’s top executive in Europe, said yesterday in Berlin. The restructuring could include the closure of as many as three factories, with the Antwerp plant the most vulnerable, he said at an auto industry conference prior to GM’s decision.
Belgian Reaction
“General Motors has lost its credibility,” Eddy De Decker, an official at the ACV Metal union, said by telephone from Antwerp today.
“First they told us we could build the new Astra, then they promised us an SUV model as a replacement,” De Decker said. “The SUV production would eventually move to China and it’s no secret that Antwerp would close down under GM’s original restructuring plan.”
GM wanted to keep Opel but was restricted in devoting U.S. bailout money to operations overseas, said Mike Tyndall, a London-based automotive specialist at Nomura.
“The real clue was that RHJ was the preferred bidder, and RHJ was the one most likely to keep it intact, allowing GM to buy it back in the future,” he said.
Brussels-based RHJ International, which holds some former assets of Ripplewood Holdings LLC, the New York-based private equity firm started by Timothy C. Collins, made an offer for Opel that GM executives called “simpler” than Magna’s. RHJ said in October it was no longer interested in purchasing Opel.
GM Directors
GM’s board, changed since a U.S. rescue of the bankrupt company, cited an improving economy and the Opel brand’s strategic importance in setting aside the Magna agreement.
Retaining ownership of Ruesselsheim-based Opel marks the second shift in GM’s post-bankruptcy plan for unloading unprofitable divisions. GM said Sept. 30 it would wind down the Saturn brand after a sales agreement with retailer Penske Automotive Group Inc. fell through.
Fred Irwin, chairman of the trust created by the German government in June to supervise Opel, said in a statement that he hoped GM’s decision would lead to new business “stability” at the unit.
Thomas Schaefer, who represents Germany’s Opel manufacturing states in federal government-led talks with GM, said Germany expects the automaker to present its restructuring plan “very quickly.”
Government Aid
“No one can make any commitment on aid until the restructuring plan is available,” Schaefer, deputy finance minister of Hesse, said today in a phone interview.
Opel’s cash position has exceeded targets for the past few months, GM’s Forster said, declining to comment on when the carmaker might run out of money.
“Where GM is going to get the money to fund the Opel restructuring is still something of a mystery,” said Aaron Bragman, an analyst at IHS Global Insight. “But from a strategic standpoint, keeping Opel was the right thing.”
GM’s Kirchner said GM will pay back the German loan if asked and needs to complete financing “as soon as possible.”
Opel’s market share declined to 7.6 percent in the first nine months of 2009, compared with 8.0 percent a year earlier, according to figures from the European Automobile Manufacturers’ Association.
Consumers probably will shrug off the latest twist in the Opel saga, Jaap Timmer, chairman of the European Opel dealers’ association, said in a telephone interview.
Some Opel dealers were “shocked” by GM’s reversal, Timmer said. “The main consequences will be for the workers and the plants.”
Nomura’s Tyndall said GM’s change of heart is a good sign for the industry.
“It’s broadly positive because it reflects the rapid recovery that GM is seeing,” he said. “In terms of broad-brush sentiment, it means the auto industry is through the worst.”
No comments:
Post a Comment