The World from Berlin Opel Restructuring Plan Offers 'Far Too Little'

General Motors unveiled its plans for restructuring Opel on Tuesday, which envision job cuts and securing billions in loans and guarantees from European governments. German commentators accuse the company of trying to dump the costs on the country's taxpayers while reserving the rewards for itself.

German commentators say GM should offer more of its own cash for the restructuring of its European units Opel and Vauxhall.
DDP

German commentators say GM should offer more of its own cash for the restructuring of its European units Opel and Vauxhall.


General Motors announced the details of its restructuring plan Tuesday aimed at slimming down its European subsidiary Opel and its British sister brand Vauxhall and bringing the companies back into the black. But few in Germany seem very thrilled about the plan.

It envisions cutting 8,300 of GM's 48,000 jobs in Europe, of which 3,900 will be in Germany. Though the closure of Opel's plant in Antwerp, Belgium, was announced in January, no other factories are scheduled to be shut down. As anticipated, Germany's IG Metall voiced its disapproval of the plan after the announcement, urging Germany's government to reject GM's proposal and even calling for the rescue of the Antwerp plant.

The real bone of contention, however, is the generous sum GM is asking European government's to contribute to the restructuring plan. The US automobile giant, recently lifted out of bankruptcy with aid from Washington, is asking for €2.7 billion ($3.7 billion) in loans or loan guarantees from countries where Opel factories are located. Germany would be responsible for coming up with €1.5 billion of that amount, with half coming from the federal government in Berlin and the remaining amount being put up by the German states that are home to plants.

As General Motors Europe Chief Executive Nick Reilly said during the plan's announcement: "It is not surprising that the US would expect Europe and European governments to help a European entity and not have the US taxpayer pay for all of the restructuring and growth of Opel."

General Motors has already pitched in €600 million for the plan, but that doesn't seem like enough to many in Germany. "We will take a very close look at the plan presented today by GM," said Roland Koch, the governor of the state of Hesse, one of four states with Opel operations, told the Dow Jones newswire on Tuesday. "According to our first impression, it will be necessary for GM, as the owner, to considerably increase its contribution to the restructuring."

In Wednesday's papers, German commentators almost unanimously back Koch's criticism and echo disapproval of the American decision.

The center-left Süddeutsche Zeitung writes:

"There are good reasons for not accepting this offer. The first is that GM says the total cost of this restructuring will be €3.3 billion. If you do the math, that means that the company only plans on paying €600 million of the total bill. That is far too little for a company that was rescued by the US government to the tune of €50 billion last year and is already bragging about being able to pay some of that money back. GM should accept some corporate responsibility for Opel and bear at least half of the costs."

The center-right Frankfurter Allegemeine Zeitung writes:

"Germany's Federal Ministry of Economics is right to ask why GM, Opel's parent company, doesn't shoulder the costs of Opel's restructuring. In response, Opel chief Nick Reilly gave this disarmingly frank answer: First, because the cash GM has on hand has already been put aside to pay back the money the US government lent it and, second, because American taxpayers have already done enough for Opel. That is an incredibly shocking view of the matter. Granted, some of the money that GM got from the US government did indirectly help Opel. But, in return for that, the US government is a majority owner of Opel, which continues to give it a right to future dividends. When it comes to German taxpayers, though, all they have left over as collateral are a few factories and properties. Likewise, there is absolutely no guarantee that the surviving jobs will be always be there. In light of these facts, it's even more difficult to justify granting these loans when Opel's competitors are being treated in an unequal manner. VW, for example, has to deal with its overcapacity problems all by itself."

Conservative Die Welt writes:

"Why should German taxpayers support massive cut-backs like this with their own money? Is it because, if they don't, more jobs will be lost and even factories might be closed? This (never openly stated) threat is GM's only trump card. But German politicians should not allow themselves to be all that influenced by it. If Opel is really so important for GM … the Americans won't lay another hand on their German subsidiary. And they would free up more than €600 million for the restructuring. That should be the minimum precondition that needs to be met before Germany gives billions in loans to Opel."

Left-leaning Die Tageszeitung writes:

"Of course, losing 8,000 jobs in Europe hurts, but let's not forget that Magna wanted to cut 11,000 jobs at Opel, too." Likewise, General Motors wants to pump about €11 billion between now and 2014 into its European operations, Opel and Vauxhall, so as to launch its urgently needed offensive of products using 'green' technology. By reducing capacity by 20 percent, the company predicts that it will be able to climb back into the black already by 2011. So, does that mean that things might brighten up for Opel at some point?"

"Well, that can only happen if the government of the states that are home to Opel operations open their coffers back up -- and, of course, if General Motors duly raises the amount it is contributing to the restructuring to above €600 million."

The business daily Handelsblatt writes:

"If you put everything in perspective, you can see that, after near catastrophe, Opel head Nick Reilly is looking for a new beginning. Opel finally has the heart to eliminate unneeded capacities and cut some expensive bureaucratic jobs. Opel wants to finally start building some cars again -- that is Reilly's announcement."

"There's no doubt that all of that could have -- and should have -- happened years ago. But now we are past the point at which we can allow Opel to go broke. GM doesn't want to see that happen, nor do the countries in Europe that would be affected if it did."

"That is not a justification for state subsidies. Opel has to make its plan for the future work on its own. Loan guarantees can, at most, only help the company surmount its initial financial hurdles."

-- Josh Ward

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