• English Site
• >Europe
• >Economic and Financial Crisis
• >

  A European Bailout?: EU Commissioner Calls for Summit to Save Opel

A European Bailout? EU Commissioner Calls for Summit to Save Opel

No one seems to want Opel, the venerable German car company, to fail. But who can save it? An EU commissioner has suggested a "mutual solution" at the European level, but the Germans still want more details from Opel and its parent company, GM, before proceeding with any bailout.

European Union Industry Commissioner Günter Verheugen is calling for a European summit to come up with a rescue plan for German carmaker Opel, which is faced with collapse if it doesn't find an outside investor or get government aid.

"We need a mutual solution to this question," Verheugen said on Thursday in Brussels following up on a comment he made a day earlier about the meeting, "not just a national one." He suggested a meeting of ministers from the EU states with auto factories run by GM Europe's Opel and Vauxhall subsidiaries, which include Germany, Belgium, Britain and Spain.

Meanwhile the German government, plainly irritated by what they see as a lack of transparency at Opel and GM, its American parent corporation, has invited corporate leaders to an emergency meeting with top economic officials at the offices of Chancellor Angela Merkel on Friday.

Opel has been hit by the financial trouble swamping GM since late last year. GM has proposed spinning off Opel to make it largely independent -- and to free it to receive a bailout from the German government. But Chancellor Merkel said Tuesday that Opel was not a "system-critical" company, implying that a proposed package of about €3 billion ($4.18 million) in rescue funds might not be forthcoming.

No one, however, wants to watch Opel fail. Industry observers say its collapse would hurt business along Europe's automotive supply chain. GM Europe employs about 56,000 people, including 26,000 in the German Opel unit alone. But Opel manufactures cars across Europe, and Germany's IG Metall industrial union has warned its collpase would threaten 400,000 European auto-related jobs.

The EU's Verheugen said the affected EU nations might step in as a group to keep Opel from collapsing. But he didn't offer a timeframe for a summit, and German politicans want to be sure that any bailout money won't disappear to other countries.

They've balked at the €3 billion bailout in part, they say, because details of the Opel spinoff plan are too vague. German Finance Minister Peer Steinbrück criticized Opel's management for its public handling of information. "What we have so far is not a workable basis for a decision," he told public radio broadcaster Deutschlandfunk.

Economy Minister Karl-Theodor zu Guttenberg said Verheugen's idea for an EU summit will also make sense only after a complete proposal for the Opel spinoff has been made public. "Many questions are still unanswered," he said.

During a meeting on Wednesday night the government decided to press Opel and GM for a more detailed reorganization plan -- which probably led to the sudden invitation to a Friday meeting at the German Chancellery. The Associated Press reports that Carl-Peter Forster, the head of GM Europe, along with GM's financial chief Frederick Henderson and Opel head Hans Demant, would meet on Friday with Guttenberg, deputy finance minister Jörg Asmussen and Thomas de Maizière, Merkel's chief of staff.

One large question is how many jobs the Opel reorganization would cost. Forster has said it might involve no more than 3,500 job cuts -- assuming the German government provides the bailout. But his remarks were met with skepticism in Berlin. "We've heard the number was closer to 7,000," said Peter Struck, who heads the center-left Social Democrats' parliamentary group.

The Rheinische Post newspaper reported on Thursday that an unpublished reorganization plan for Opel mentions 7,600 possible job cuts. An Opel spokesperson denied the report, however, saying the 7,600 figure referred to the 3,500 threatened jobs at Opel plus 4,100 more at Saab, another GM unit on the verge of bankruptcy.

msm -- with wire reports