09 March 2009

Germany Considers Aiding GM's Opel, U.K. Weighs Vauxhall Options

As Originally Posted at The Wall Street Journal

Germany and the U.K. continued to weigh solutions for troubled European subsidiaries of General Motors Corp. on Monday, as Washington debated rescue plans for the auto giant in the U.S.

The U.K. government plans to sit down Wednesday with auto-industry representatives and others to discuss support for the country's auto sector, in which GM's Vauxhall subsidiary plays a major role.

In late January, the U.K. government announced a £2.3 billion ($3.24 billion) loan-guarantee package to support the sector, although industry officials at the time questioned how quickly funds would be made available.

Asked whether there would be any fresh support announced for the auto sector and Vauxhall in particular, a spokesman said "if there are any announcements to be made Wednesday, we'll announce them Wednesday."

Wednesday's meeting will be hosted by Business Secretary Peter Mandelson and will include officials from banks and regional development agencies, a spokeswoman for the department said.

"Vauxhall is in terrible trouble," Mr. Mandelson said on BBC television Sunday. "I've spoken three times in the last week to the president of General Motors in Europe; I've also spoken to the German economics minister because their plants are similarly affected and we will approach what we need to do together on this."

In Berlin, a government spokesman said Monday that securing jobs at GM's big Opel plants will be the government's main aim if it decides to give the company any aid. The spokesman, Thomas Steg, said it was clear that restructuring plans for Opel weren't sufficient for the government to make a final decision.

"This plan is still incomplete and requires a fleshing out," Mr. Steg told reporters. "The federal government's aim is clear: to secure jobs at the Opel plants permanently," he added. But any decision to help Opel could take weeks, he warned.

GM Europe Chief Executive Carl-Peter Forster last week presented the company's restructuring plan for Opel to the government and said GM needs €3.3 billion ($4.17 billion) in aid across its European operations. GM posted a total 2008 loss of $30.9 billion.

German politicians are under pressure from labor unions to bail out Opel, GM's largest European brand, to help save the company's 25,000 jobs -- a figure that more than doubles when including parts suppliers and other Opel-linked companies.

However, signs of a growing rift between the government's two ruling parties could complicate rescue plans.

The center-left Social Democratic Party worries that calls by Chancellor Angela Merkel's conservative Christian Democrats for detailed restructuring plans could cost jobs if the company goes under before it can be saved.

"We will help when the benefit for all people is more than the harm," Ms. Merkel said in her weekly video-streamed message Saturday.

The SPD's leader, Foreign Minister Frank-Walter Steinmeier -- who will challenge Ms. Merkel in general elections next fall -- is pressing for a quick solution.

"Politicians are responsible to protect Germany as an industry location," Mr. Steinmeier said over the weekend. "Politics must now come into play and fight for every job."

Interior Minister Wolfgang Schäuble, a member of Ms. Merkel's conservative party, said last week that Opel should seriously consider filing for insolvency because such a move could help the company protect its business assets.

The financial predicament of GM's European operations also could feature at an Anglo-German summit Friday, when Ms. Merkel visits the U.K. for meetings with Prime Minister Gordon Brown.

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