By SPIEGEL Staff
Instead of cutting back the struggling automaker's production to reduce excess capacity, the Magna bid holds out the prospect of precisely the opposite. In Rüsselsheim alone, 250,000 cars could be rolling off the assembly line in the future, compared with 160,000 today. Production at Opel's plant in the western city of Bochum would increase by 58,000 units.
Despite these ambitious plans, even Magna's plan does not avoid layoffs. A total of 11,600 jobs would be cut at General Motors Europe, including 9,500 manufacturing jobs, although the German plants would get off relatively lightly.
Under the Magna plan, 2,580 jobs would be cut at Opel's four German plants, including 280 in the southwestern city of Kaiserslautern and 100 in Rüsselsheim, while the workforce at the modern Eisenach plant would even increase. Bochum would be the only plant to lose a relatively large number of jobs: some 2,200 of the current total of 5,200.
This is another reason why North Rhine-Westphalia's Governor Jürgen Rüttgers is so vehemently opposed to Magna. He sees his state disproportionately hard-hit by Magna's proposed restructuring measures. At the same time, his position highlights how counterproductive the practice of government bailouts for companies can be.
From an economic standpoint, it may even make sense to cut the largest number of jobs in Bochum, where the production facilities are outdated. It would cost several hundred million euros to upgrade the Bochum plant. The relatively modern equipment in Rüsselsheim, on the other hand, is not yet being utilized at full capacity.
A potential Opel buyer that took the wishes of all governors into account and spared Bochum might stand a better chance of sealing the deal. But that sort of an arrangement would limit the company's future prospects.
From the standpoint of German politicians, one attraction of the Magna proposal is that it imposes a heavier burden on Opel's foreign sites than its German ones. It calls for closing the company's plants in Antwerp, Belgium, and Luton in the UK. Production would be scaled back at other plants, such as Zaragoza, Spain, and shifted to Germany.
Magna is not just courting the Germans with rising production numbers and limited job cuts. Other elements of its plan seem designed to win the support of anxious politicians.
For instance, Magna plans to give employees a 10 percent share in the new Opel company. Moreover, up to 10 percent of annual pre-tax profits would be distributed to employees, and at least 7 percent would be invested in research and development. The proposal even includes ideas to benefit the common good: According to the bid, "up to 2 percent of net income shall be used for charitable purposes." This method of allocating revenue is based on current practice at Magna, where Stronach distributes pre-tax profits at his operations around the world according to these same percentages.
The consortium even plans to contribute €200 million ($280 million) to the government bridge loan needed to ensure Opel's survival in the coming months until an agreement has been reached.
Of course, Magna and Sberbank have their own wish lists. "A government loan guarantee for the amount of €4.5 billion is envisioned," the proposal states. It would apply for five years.
Even though Sberbank is Russia's biggest bank, the consortium intends to borrow money from Germany's second-largest bank, Commerzbank. Among the documents included in the Magna bid is a statement of intent from Commerzbank regarding a €4 billion loan. According to the plan, the loan will be repaid by 2014.
In addition to the loan guarantee, the German government would be asked to shoulder additional burdens. If Magna and Sberbank have their way, the government would take on at least a portion of pension commitments worth €3 billion ($4.2 billion).
The plan proposes that Magna would cooperate with GM, the German government and the pension insurance association "to find and implement an acceptable solution." But, as Magna promised in writing on Friday, failure to find an agreement on the pensions issue would not cause the takeover bid to collapse.
Key corporate data for Fiat and GM Europe.
Magna's proposal contains many unknown factors. Nevertheless, a group of government experts who met at the Economics Ministry last Thursday afternoon quickly agreed that the plan is more promising than that of the previous favorite, Fiat.
Until recently, the Turin-based automaker's bid had also made an acceptable impression in Germany. But perhaps Fiat's CEO Sergio Marchionne felt too confident. On Wednesday, Marchionne submitted as Fiat's proposal merely a slightly rehashed summary of the plan he presented in Berlin three weeks ago.
It wasn't only the written Fiat proposal that left something to be desired; Marchionne's promises were also not nearly as tempting as Magna's. Under the Italian's plan, far more jobs would be lost at German plants, and the Kaiserslautern plant would have to be shut down almost completely.
Another problem for Marchionne is that he is not overly popular at GM headquarters in Detroit. Management at Opel's parent company is still upset over the fact that it cost GM €1.5 billion ($2.1 billion) to dissolve an earlier joint venture with Fiat. GM also fears that Opel technology could make its competitor Chrysler, which Fiat is also acquiring, more competitive in the US market.
Huge Risks
If Magna prevails, both the Austrian-Canadian parts supplier and the German government will be embarking on an economic adventure. The partners in the consortium are in far worse shape than they are willing to admit.
It's true that Magna boasts billions in financial reserves. But the fact is that the recession has been very hard on the giant parts supplier, which saw its sales decline by almost half in the first quarter of 2009. Russia's Sberbank, for its part, is controlled by the Russian government, which is currently involved in the same costly efforts to keep its financial institutions afloat as governments in Britain and the United States.
Besides, the automobile crisis is no less severe in Russia than in the Western industrialized nations. Car sales are predicted to plunge by about 60 percent this year, prompting many Russian auto plants to sharply cut production and reduce wages. This financial instability is reflected in the economic underpinnings of the Magna plan. Instead of being a growth market for the future, the Russian car business could be a losing proposition for years to come.
Economics Minister Guttenberg is skeptical about the Magna plan for these reasons. He is concerned that the Magna takeover will fail and the government could end up footing the bill if indeed it has to guarantee the Opel loans. Guttenberg considers the Magna bid to be no more promising than the other potential buyers' plans.
It is no surprise that the minister is still saying that a painful end for Opel could be preferable to prolonging the agony. "We still don't have a risk analysis that leaves no doubts," he says. "In this respect, an orderly bankruptcy is still an option."
MARKUS DETTMER, ALEXANDER NEUBACHER, CHRISTIAN REIERMANN, WOLFGANG REUTER, MICHAEL SAUGA
Translated from the German by Christopher Sultan
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