GM Makes Right Decision to Keep Opel

GM Makes Right Decision to Keep Opel

General Motors' decision to keep Opel has ruffled political feathers and rankled the union rank and file in Germany, but it is - and always was - the right business decision for the automaker.

While it is in dire need of restructuring that it clearly is about to get, Opel gives GM a presence in Europe that Chevrolet alone cannot. Even more important, Opel architectures and engineering expertise are the backbone GM's global growth.

The decision to put Opel up for sale in the first place was an act of desperation and done under political pressure. Now, with GM's board coming to its senses, it is time for the new GM to stand up and quick start a massive restructuring of its European operations. And it looks like that's what GM is doing.
 
This week, GM CEO Fritz Henderson went to Opel headquarters where he's meeting with company officials and the head of the automaker's employee council. He assures that a restructuring plan is to be detailed soon.

Henderson was accompanied by Nick Reilly, executive vice president and president of GM International Operations, who, GM confirmed on Tuesday, immediately assumes responsibility for Opel and Vauxhall while an "external" search for a new CEO begins. Note external. Read European.

Reilly is the right man for the job as he is not only British -- which gives him credibility with cynical Europeans who don't believe Americans can run their business and with a proven track record. He took the nearly defunct Korean automaker Daewoo and, to the shock of skeptics, turned it around. For that, he received the Global CEO Grand Prize 2006 from the Korean Academy of International Business. Today, GM Daewoo is a critical factor in GM's global growth, especially in emerging markets and Asia-Pacific, which Reilly has overseen during its current success.

Another hopeful sign is that GM's board of directors gets it and has the backbone to stand up to GM management, used to boards that largely rubber stamp their suggestions. The board, made up largely of new members from outside of the auto industry as of July, spent a lot of time questining the Opel sale and ultimately overruled management's recommendation to sell Opel to Magna. That bodes well for the future of the automaker. -- Michelle Krebs, Senior Analyst and Editor at Large

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.