GM's Opel: "Insolvency" Could Be an Option, German Official Says
March 06, 2009
By Bill Visnic
A top figure with the powerful German workers union IG Metall reportedly told a German newspaper this week that a failure of the Adam Opel AG unit of General Motors Corp. would cost some 400,000 jobs in the country. At the same time, a top German official said insolvency could be an option for Opel.
German politicians and GM representatives are scrambling to fashion a financial and organizational restructuring for Opel, a matter complicated by the fact GM itself now appears to be fighting a daily battle for survival.
Armin Schild, head of IG Metall's Frankfurt local that governs workers at Opel's cornerstone Ruesselsheim plant, was reported as saying a shutdown of Opel would cost thousands of primary jobs in Germany and across Europe -- and would have an enormous ripple effect for already embattled suppliers.
Nevertheless, a top German official said in a newspaper interview Friday that insolvency could be an option for Opel. "The public perception is that insolvency is associated with going bust or bankruptcy," said German Interior Minister Wolfgang Schaeuble. "But that is wrong. We must grasp that to survive such a crisis, modern insolvency rules are a better solution than the state taking a stake."
GM and Opel have asked for billions of euros in loans to bolster Opel, but Germany has yet to commit to direct aid. GM Europe submitted a "viability plan" last week similar to that the U.S. government has required of GM, but government officials have requested more details on that plan. That plan calls for the partial spin-off of Opel and GM's U.K.-based Vauxhall Motors, a move that GM said would require about $4 billion in government help to accomplish.
On Friday, German Economy Minister Karl-Theoor zu Guttenberg met with executives from Opel and GM in Berlin, Reuters reported. After the meetings, Guttenberg said it will take several weeks to decide whether to grant state aid. GM has also called on other European governments to provide support for its activities.
GM Chief Operating Officer Fritz Henderson, GM-Europe chief Carl-Peter Forster and Opel's managing director, Hans Demant, were meeting with German Chancellor Angela Merkel Friday.
At the same time, German newspaper Bild-Zeitung reported that GM has given up patents originally owned by Opel as collateral for aid from the U.S. Treasury Department. It's not clear if Opel's real estate and factories, also owned by GM, were used as collateral.
Apart from the tangled financial aspects of the situation, some camps have suggested Opel should be restructured to be much more of an independent company, arguing that troubles at parent GM have dragged down Opel and would make a recovery more difficult unless Opel can cut many of its structural and operating ties with GM.
GM already has cast off its Saab Automobiles unit and is likely to shut down the Hummer
division -- GM said it will have a final decision on Hummer by March 31 -- as the company scrambles to cut is cash burn in an attempt to survive the worst level of auto sales in the U.S. since the 1960s.
GM lost nearly $31 billion last year and in February its sales slumped 52.9 percent, the worst performance of the Big Six automakers in the U.S., selling just 127,296 light vehicles. The only GM vehicle last month to post a sales increase compared with February 2008: the Opel-derived Saturn Astra.
Photo by GM
The Saturn Astra is Opel designed and built in Germany.
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