GM's Opel Sale Roils Europe

The GM bankruptcy is actually moving along pretty smoothly in this country. Not so in Europe where the sale of its Opel subsidiary is roiling governments.

A quick recap. After it looked like Fiat had the inside track on Opel, a consortium of a Russian government owned bank, an auto parts manufacturer, GM, and the employees of Opel ended up being the buyers. Magna International (20% interest), the parts manufacturer and an Austrian-Canadian owned company, Sberbank (35% interest), the Russian government owned bank, GM (35% interest) and Opel employees (10% interest) are going to be the new owners. The German government is putting up 4.5 billion euros in loan guarantees and bridge loans to get the whole thing off the ground.

That’s where the problems in Germany crop up. A conservative member of German Chancellor Angela Merkel’s cabinet has been raising holy hell about the loans. He contends that the company should have been put into receivership and then brought back out at far less cost. This is of a piece with the mentality of the Germans throughout the economic crisis. They have been highly reluctant to dedicate state funds towards fiscal stimulus or bailouts, preferring instead to hew to their conservative fiscal philosophies.

In Italy, politicians are having a hissy fit about Fiat losing the deal and falling all over themselves to point fingers and assess blame. Meanwhile, European countries in which Opel maintains manufacturing facilities are sweating out the fate of those factories. The fear is the Russians will use their leverage to close European facilities and move the manufacturing operations to Russia. Germany has an agreement that prohibits Russia from doing that to them but that agreement extends no further.

Ironic, isn’t it, that in the supposedly most free market of all — the U.S. — the effective nationalization of a major slice of the economy elicits very little turmoil while the Europeans are running around in circles over a small piece of the pie. Draw your own conclusions.

more: here

Comments

[leapingcat:]

The turmoil in Europe is mainly because the company is GM Europe, not GM Germany or even Opel, which is just a brand, in a similar way to Chevrolet for example. There are also plants in Britain (Vauxhall), Belgium and Spain, so other European governments are concerned that the sale has been rushed through, and that European Union rules, which prohibit national governments from operating outside an EU framework in such matters may be flouted. Otherwise this option is generally preferred as the least worst one.

Jun 01 03:33 PM

[Mad Hedge F...:]

As it should. General Motors (GM) is finally gone. Don’t look at the share price, which now trades in pennies, down from $90. Look at the labor force, which has shrunk from 360,000 to 39,000 on its way to 18,000. I sat at Ralph Nader’s knee (because there were no chairs) 40 years ago, who wore his unfashionable trademark white shirt and pencil thin tie, fresh from the runaway success of his anti GM crusading book Unsafe at Any Speed, listening to him predict the demise of GM. Companies that recklessly kill off their customers and produce inferior products at high prices can’t last, he said. Fuel efficiency and the environment came later. Many people considered him a communist then, for bashing GM was considered unpatriotic then. No doubt J. Edgar Hoover’s FBI was following his every move. I think that Obama should now make Nader a director of GM, along with that other GM hater, Michael Moore.

Jun 02 10:53 AM

[261133:]

Opel was part of GM and is now a company on its own. Vauxhall as well as Saab isn't involved in that deal, they still belong to GM and will be sold separately.
As for the Opel plants in Spain and Belgium, this will be decided by the Opel management in Ruesselsheim.
BTW, the great relationship between Germany and Russia will be very helpful in building the new Europe.


On Jun 01 03:33 PM leapingcat wrote:

> The turmoil in Europe is mainly because the company is GM Europe,
> not GM Germany or even Opel, which is just a brand, in a similar
> way to Chevrolet for example. There are also plants in Britain (Vauxhall),
> Belgium and Spain, so other European governments are concerned that
> the sale has been rushed through, and that European Union rules,
> which prohibit national governments from operating outside an EU
> framework in such matters may be flouted. Otherwise this option is
> generally preferred as the least worst one.

Jun 02 01:38 PM