GM to Keep European Opel Unit (As a Result of Economic Reflation)

The sale to Canadian auto parts maker Magna International (MGA) and its partner, Russian lender Sberbank is off. With bankruptcy now behind it, General Motors now feels confident it can proceed with Opel under the GM umbrella.

From the GM press release:

Given an improving business environment for GM over the past few months, and the importance of Opel//Vauxhall to GM’s global strategy, the GM Board of Directors has decided to retain Opel and will initiate a restructuring of its European operations in earnest.

“GM will soon present its restructuring plan to Germany and other governments and hopes for its favorable consideration,” said Fritz Henderson, president and CEO. “We understand the complexity and length of this issue has been draining for all involved. However, from the outset, our goal has been to secure the best long term solution for our customers, employee, suppliers, and dealers, which is reflected in the decision reached today. This was deemed to be the most stable and least costly approach for securing Opel/Vauxhall’s long-term future.”

On a preliminary basis, the GM plan entails total restructuring expenses of about € 3 billion, significantly lower than all bids submitted as part of the investor solicitation. GM will work with all European labor unions to develop a plan for meaningful contributions to Opel’s restructuring. While Opel continues to outperform against its viability plan assumptions and immediate liquidity is stable, time is of the essence.

I spoke about this issue on Tuesday on the BBC. But, look at this as a result of economic reflation. GM has exited bankruptcy and feels confident enough of the future path of the economy to keep Opel instead of having to sell in a fire sale.

The Germans are livid, according to the Wall Street Journal.

The governor of the German state of Hesse, where General Motors Co.’s Opel unit is headquartered, said Wednesday he is "concerned and at the same time annoyed that the months-long efforts to find a good solution for Opel have failed because of GM."

In a statement, Roland Koch, a confidant of German chancellor Angela Merkel, said that considering the "negative experience in recent years with GM’s corporate policy, I’m worried a lot about the future of (Opel) and its staff."

In a surprise move, GM’s board late Tuesday decided it wants to retain its core European operations after talks over a possible sale have been dragging on for months.

Remember that other EU countries came out of the woodwork saying, in effect, that the Germans had bought off GM and were being advantaged by unfair subsidies while in places like Belgium and Spain workers were suffering.

Very interesting.

Comments

[battman:]

They just can't let go of the "world's biggest" moniker, even if it means having to go broke again. Just goes to show you why the GM guys are a bunch of money losing failures. I hope they get sued over this.
Stupid, very very stupid. But what else did we expect from these clowns.
We can thank the government for this one. Let the failures fail please.

Nov 04 06:42 AM

[a fat panda:]

"We understand the complexity and length of this issue has been draining for all involved. "

I can after many years finally agree with something said by GM. This has been draining mainly on the taxpayers involved.

Nov 04 06:48 AM

[VK9141:]

I can see why there may be some upset people in Germany but if GM sorts out Opel/Vauxhall it could do well in the long run. There are obviously a lot of challenges to this though (not least satifying several countries' interests).

I think only VW sells more cars in Europe and some models like the Insignia, the Astra and the Corsa are very popular with consumers (at least where I am in the UK where Vauxhall is ubiquitous).

Nov 04 07:30 AM

[casey00001:]

No, what happenned here is Fitz went to Papa Obama and said, Please Daddy, Please can I keep Opel? Remember nothing gets approved/sanctioned without approval of the owner of GM, the Federal Government.

Nov 04 08:45 AM

[Leftfield:]

Don't forget the purchase of Delphi with nearly $3 billion Obamadollars.
Bankruptcy and failure sucks, but it sucks even more when surviving players are denied the fruits of their success when zombies are kept alive.
Washington is just getting warmed up. State and local governments await in the wings. Joined by repeat visits to the public trough by earlier bailout failures.

Nov 04 09:58 AM

[epistrophy:]

E

Nov 04 10:39 AM

[epistrophy:]

Good move for GM and also better for Opel in the long run. I'm rooting for their success. Opel has a lot of good engineering and a good reputation in Europe. This technology has found its way into the newer American cars, including the Chevy Malibu which is a real star. Shared platforms make sense in a global car industry because they improve economies of scale. Thankfully GM and Ford are shedding the millstone-expense of separate car lines for the U.S. market. If you have driven European and Japanese cars and are not looking at GM and Ford you are behind the curve. American cars now present real value and a great driving experience. They handle like European cars because they share underpinnings of their European brands (Opel, Volvo) and are more reliable than competing European brands and even surpass some Japanese manufacturers. The Ford Focus has consistently been a technological leader in the small car business in Europe (for example, they designed a fully independent rear suspension that was economical to manufacture), giving VW a run for their money in their own backyard! I for one support a resurgent American car industry and am happy to see they are on the right track.

Nov 04 11:35 AM

[battman:]

How is it a "resurgent" car industry? It is a subsidized car industry that will waddle along until the next hand out when they go broke again in about 15 years, AFTER the legitimate car manufacturers took it in the chin for NOT being subsidized.
I'm glad you're happy, and I hope you'll squirrel away enough money to write them another check when they come knocking again ater the next bankruptcy.

And "back on track"?? How long ago was the American auto industry actually a thriving industry that MADE money??


On Nov 04 11:35 AM epistrophy wrote:

> Good move for GM and also better for Opel in the long run. I'm rooting
> for their success. Opel has a lot of good engineering and a good
> reputation in Europe. This technology has found its way into the
> newer American cars, including the Chevy Malibu which is a real star.
I for one support a resurgent American car industry
> and am happy to see they are on the right track.

Nov 04 06:36 PM

[epistrophy:]

Hey "Battman" FYI read the papers: Ford made almost a billion dollars day before yesterday and they took no money from the government. You'll be complaining more when your kids have no place to work. GM ran into a perfect storm of collapsing economy and events that were not all their fault, especially unfundable health care costs for retirees that their foreign competitors in both the U.S. and abroad did not face. NOT a level playing field either here in the U.S. or overseas (check the rules Korea, Japan, and China have in place to keep out American cars). If you ask me our legislators were sorely remiss in not addressing this. The "free market" is not free!

Nov 04 10:25 PM

[battman:]

Ford did a good job and should be commended. They should be the only American auto maker still standing and be allowed the opportunity to become a serious player and real consistant money maker. By propping up the useless other two, all it does is hurt Ford's long term prospects of survival.
With respect to GM and the skyrocketing costs "not being their fault", sorry but who agreed to the union terms that swelled its costs to the point of forcing them into bankruptcy? Was it me? Was it you? I'm pretty sure they did that to themselves. And they have had these same competitors for over 40 years now, and only NOW they realized they were building a BETTER product cheaper?? So do I feel any pitty? Absolutely not. Their short sighted fat cat mentality caught up to them.
And thanks for asking about my kids, they're still pretty young, but they wouldn't be working in an assembly line anyways. Propping up failing companies so my kids can have a job is counter productive. If Ford would have been allowed to go it alone, it would have bought the "good" plants and would have had to double production to meet demand (a.k.a hiring people). Toyota and Honda would have bought the other "good" plants and would have had to increase production (a.k.a hiring people), so my kids could have still had the opportunity to find that wonderfully overpaid union job. Just because GM and Chrysler shut the doors, doesn't mean the demand and infrastructure magically fade away.
I just realized, if my kids work there, they could become part of the problem rather than just complaining about it! Circle of life my friend, circle of life.


On Nov 04 10:25 PM epistrophy wrote:

> Hey "Battman" FYI read the papers: Ford made almost a billion dollars
> day before yesterday and they took no money from the government.
> You'll be complaining more when your kids have no place to work.
> GM ran into a perfect storm of collapsing economy and events that
> were not all their fault, especially unfundable health care costs
> for retirees that their foreign competitors in both the U.S. and
> abroad did not face. NOT a level playing field either here in the
> U.S. or overseas (check the rules Korea, Japan, and China have in
> place to keep out American cars). If you ask me our legislators were
> sorely remiss in not addressing this. The "free market" is not free!

Nov 05 06:43 AM

[tripleblack:]

[quote] Remember that other EU countries came out of the woodwork saying, in effect, that the Germans had bought off GM and were being advantaged by unfair subsidies while in places like Belgium and Spain workers were suffering. [quote]

Yes, this is the source of the sour grapes in Germany. They thought they had a deal, and could pass the pain of the restructuring (layoffs) onto their neighbors in the EU, while they got to pick which French and Spanish factories got the ax.

Nov 05 08:26 AM

[akorozco:]

The Germans are livid, the Russians are livid, the Opel workers are walking out... GM seems to be the only one who's happy with this deal. www.newsy.com/videos/g...

Nov 06 10:23 AM