In Berlin on Monday to present his plan to create a new global auto company made up of Fiat, Opel and Chrysler, Fiat CEO Sergio Marchionne described the proposed three-way merger as a "marriage made in heaven."
He was perhaps unaware that the same phrase was used by then-Daimler boss Jürgen Schrempp in 1998, when Daimler-Benz merged with Chrysler. That marriage ended in a messy and drawn-out divorce which was only finally completed last week, when Daimler reached an agreement to get rid of its final 19.9 percent stake in Chrysler.
This time around, unions and workers' representatives at Opel are concerned that a possible liaison with Fiat might not be such a great solution for the European subsidiary of beleaguered US carmaker General Motors. There was outrage Monday when it looked as though Opel's Kaiserslautern plant might be closed as a result of a Fiat takeover. German Economy Minister Karl-Theodor zu Guttenberg said after his meeting with the Fiat CEO that only three of the four Opel plants in Germany would be safe and that the Kaiserslautern works could be "hit" by a takeover by the Italian company.
In an interview published in Tuesday's edition of the mass-circulation daily Bild, however, Marchionne said he wanted to keep all four Opel plants in Germany open after a possible merger. "I need the plants in the future in order to build enough cars," he said. At the same time, he added that the workforce needed to be reduced. "No one will be able to change that fact."
Meanwhile, another suitor is also vying for Opel's affections. The Austrian-Canadian auto parts manufacturer Magna confirmed Tuesday that it was engaged in negotiations with Opel, GM and German authorities about a possible investment in Opel. The talks involved potential alternatives for the "future of Opel, including the possible takeover of a minority stake in Opel by Magna," the company said, adding that it could not guarantee a deal would come out of the talks. According to earlier media reports, Magna wants to invest in Opel with the help of the Russian carmaker GAZ and the Moscow-based bank Sberbank.
In the Bild interview, Marchionne expressed skepticism about a Magna takeover. "Magna wants to invest in Opel with Russian help," he said. "It would surprise me if the German government considers that a good solution." He said he wanted to "build a genuine European auto manufacturer that would be successful globally" and which would "make jobs in Germany and around the world safe for the future." The proposed merger would create a global company with annual sales of up to 7 million cars and €80 billion ($107 billion) in revenues.
The future of Opel has become a hot political issue in Germany. With the country facing a national election in September, politicians do not want to see the troubled carmaker, which is a German institution, go bankrupt. Prominent members of the center-left Social Democrats (SPD) and trade union representatives favor a tie-up with Magna, while Chancellor Angela Merkel's conservative Christian Democrats (CDU) want to keep on negotiating with Fiat as well. Sources close to the negotiations have said that the Fiat proposal is much further along than the Magna bid.
The SPD, which shares power with the CDU in a coalition government, fears that an Opel merger with Fiat would lead to major job losses and that the Italian carmaker may be more intent on securing German government credit guarantees for its own salvation than ensuring Opel's longterm future.
In any case, the German government is hoping for a quick solution to the Opel problem. "The decision should not be postponed forever," Economy Minister Guttenberg told the television station ZDF on Monday evening. Referring to the Fiat plans, which he had earlier described as "interesting," Guttenberg said that the offer should be closely examined and not rejected out of hand. In another interview with the station ARD, Guttenberg said Magna needed to reveal more details of its plans.
Commentators writing in Germany's main newspapers Tuesday were largely skeptical about Fiat's shopping spree, arguing the merger of three troubled companies could only end in tears.
The Financial Times Deutschland writes:
"There is no clever strategy behind Marchionne's wedding plans, merely blind panic of falling behind. The Fiat boss openly said months ago that the Turin firm is too small to survive in the long term without a partner. If you take Marchionne at his word, then his only chance lies in buying extra capacity -- and a lot of it."
"From Marchionne's perspective, it is only rational for him to coolly calculate how the state can help him out in his rescue plans for his own company. Germany's grand coalition government has already taken an unmistakable stance in favor of saving Opel because it cannot allow the traditional German company to fail in an election year. Taxpayers, on the other hand, can only feel uneasy, as it will be them who will end up paying for the Fiat boss's daring adventures through guarantees worth billions. At the end of the day, with the proposed merger of Fiat, Chrysler and Opel, three crippled firms are being put together. Each of them has enough problems of its own."
"For competitors to a new Fiat-Opel company, like Volkswagen, it would be in any case disastrous if the world's second largest mass-market auto manufacturer were to be created under political patronage, thereby increasing the pressure on other companies to reduce costs. Nothing would have been achieved if rescuing jobs at Opel leads to them being cut elsewhere."
The center-left Süddeutsche Zeitung writes:
"Marchionne shouldn't overextend himself -- his plan is too ambitious. It is so complex that it will hardly be possible for it to succeed. The Italian manager wants to fuse together three more or less sickly companies from three different countries with three different cultures. None of them have enough capital at their disposal, or the necessary modern technology, not to mention the necessary management resources. It's no coincidence that all of them are in trouble."
"But it's not just about creating a new company. The task at hand also involves reducing the huge global over-capacity in the car industry. The auto sector employs many more people than it needs, and therein lies the problem. The industry is politically far too important for it to function purely according to economic criteria."
"The financial and economic crisis has revealed the weaknesses of the car industry. The companies that made the biggest mistakes are now being punished the hardest. At the same time, the crisis is also setting the course for the industry's future. Still, Marchionne's plan looks more like it is about preserving old structures and about billions of taxpayers' money being used to prevent or postpone a sea change in the sector. It is highly probable that, a few years from now, Fiat, Chrysler and Opel will still have the same problems."
The center-right Frankfurter Allgemeine Zeitung writes:
"At Opel headquarters and in the works council ( ), they would rather have Magna than Fiat as their new owner, assuming it is really serious about a takeover. ... Nevertheless, the Opel management has to seriously consider the new advances from Fiat. The loud voices, supported by certain politicians, particularly the Social Democrats, saying that an investor needs to bring more in with it and provide more guarantees, need to get quieter. The fact that the government needs to pave the way for the deal with comprehensive guarantees is already bad enough."
"It is not part of (the Opel management's) job -- despite justifiable misgivings -- to scare investors off. One doesn't need to immediately fall down on one's knees in gratitude, but nobody at Opel has the right any more to make unrealistic demands and spout boastful tirades."
The conservative Die Welt writes:
"Popular sayings and proverbs are perhaps not always true, but there must be something true in catchphrases that have been passed down through the generations. German car fans only have to hear the name Fiat and immediately they say what the acronym supposedly stands for: Fehler in allen Teilen ("defects in all parts"). Is a manufacturer which has failed to take action to definitively get rid of such an image -- achieved and fostered in the 1960s, 1970s and 1980s -- really the right company to take over a stalwart of German industry like Opel?
"Fiat is certainly not the white knight that the Opel staff dreams of -- large, financially secure and willing to let Opel continue as before. Fiat has even got debt of its own. On the other hand, Fiat scores points with its charismatic boss and its young product range, as well as the fact that with its small and compact cars the design and technology are -- despite all the catchphrases -- on the right path. At Chrysler in the US they are absolutely not unhappy about the Italians moving in. This is despite the fact that Fiat has managed to get a solidly bad reputation in terms of quality on the other side of the Atlantic too. The Americans translate the brand as 'Fix it again, Tony'."