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GM Decides To Keep Opel, Angers Germany
By Geir Moulson, Associated Press Writer
Manufacturing.Net - November 04, 2009

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BERLIN (AP) -- General Motors Co.'s decision to scrap the sale of European subisidiary Opel raised new uncertainty Wednesday over the unit's future, astonishing politicians in Germany and Russia and prompting workers to plan walkouts in protest.

The GM board's unexpected decision to call off the sale to auto parts maker Magna International Inc. and Russian lender Sberbank was a startling end to months of haggling in which Chancellor Angela Merkel and other German leaders had strongly backed the deal.

Now German workers worry GM will make even more cuts to return Opel to profit than Magna would have.

Still, the decision won a cautious welcome from union officials in Britain and Poland, where workers had feared possible cutbacks in a Magna takeover.

GM's decision handed Merkel's new center-right coalition government an unwelcome test just a week after taking office. German officials swiftly demanded a restructuring plan from Detroit and vowed to recover by Nov. 30 a euro1.5 billion ($2.2 billion) bridge loan granted to keep Opel afloat as a buyer was sought.

"We will get the taxpayers' money back," new Economy Minister Rainer Bruederle told reporters. "Dealing with employees in this way eight weeks before Christmas is in no way acceptable," he added.

GM Europe spokeswoman Karin Kirchner said that "if we're asked, GM will repay the bridge loan in question."

Merkel, who was flying home from a speech to the U.S. Congress when GM announced its decision, made no public comment Wednesday, but officials made clear their annoyance.

Spokesman Ulrich Wilhelm criticized GM's "surprising 180-degree turn" and said Merkel may soon speak with President Barack Obama about the issue. GM is majority owned by the U.S. government, which said it wasn't involved in the decision to keep Opel.

On Wednesday, Merkel spoke with Opel's chief employee representative, Klaus Franz, who said it was "a black day for Opel."

There was a furious reaction from the governor of Germany's most populous state, North Rhine-Westphalia -- which is home to Opel's Bochum plant and holds elections next May that will offer a crucial test for Merkel's new governing coalition.

"After many promises and months of negotiations ... GM has left workers out in the cold," said Juergen Ruettgers, a deputy leader of Merkel's party. "This attitude from General Motors shows the ugly face of turbo capitalism. It is completely unacceptable."

Russia, which had backed the Magna-Sberbank plan, was also caught by surprise.

"The decision by GM to turn down the deal was astonishing," state news agencies quoted Prime Minister Vladimir Putin's spokesman, Dmitry Peskov, as saying.

Germany had promised euro4.5 billion in further financing to support plans for Magna and Sberbank to take a 55 percent stake in Opel -- a pledge that drew concerns from the European Union's competition commissioner.

With those plans off the table, Germany appeared unenthusiastic about pledging new support -- though it wasn't ruling it out.

"General Motors has the right to make an application, we have the duty to examine this application, and the outcome of this is open," Bruederle said.

There were few immediate details on how exactly GM's plan would work.

GM, which said the European business environment and GM's health have both improved since the company put up Opel for sale, put the cost of restructuring at euro3 billion.

Unions and employee representatives had offered cost-cutting concessions to ease a Magna deal, such as foregoing pay increases, that are now off the table. GM will now face a new battle to secure concessions for its own plan -- and raised the prospect of a bankruptcy if it is blocked.

"It is in the interest of the unions to negotiate a deal with GM," GM Europe's Kirchner said. Failure to restructure "would result in the operation becoming insolvent, an unnecessary and undesirable outcome for all involved."

However, German labor representatives were defiant.

"We won't help shape the way back to General Motors," Franz said. "Instead, we'll take up our classic function of defending the workers."

Franz said workers would start brief work stoppages Thursday. Rudi Kennes, another employee representative, said workers at the Antwerp plant in Belgium, whose future is uncertain, would walk off shifts on Friday and Sunday to warn GM against job cuts.

In Spain, Industry Minister Miguel Sebastian said Madrid would not make concessions to GM beyond a deal it had with Magna to accept 900 job cuts at Opel's Zaragoza plant.

"We are not willing to budge even an inch," he said.

The mood was different in Poland and Britain, where workers had feared pressure to save jobs in Germany would leave them bearing the brunt of cutbacks.

Magna had said it planned to cut about 10,500 of the 50,000 jobs at Opel and sister brand Vauxhall in Europe, with less than half the job cuts, or around 4,500, in Germany -- home to around half the work force. It also said it would keep all four German plants open.

"The future is still uncertain, but our fear is smaller," said Miroslaw Rzezniczek, a Solidarity union official at the Gliwice plant in Poland. "Magna ... did not want to guarantee that our plant will not be closed."

Although "detail is in short supply ... I am pleased we will be dealing with GM because we know them and we understand their culture -- and they know us," said John Featherstone, a Unite union official at Vauxhall's Ellesmere Port plant.

There was plenty of resignation, but little optimism, at the Ruesselsheim plant in Germany, where Adam Opel GmbH has its headquarters.

"They led us all around by our noses," worker Michael Kleinmann said. "They're not interested in the fate of individuals."

Co-worker Ali Yildiz said: "Now everything's possible again, just like a year ago."

Associated Press writers Melissa Eddy and George Frey contributed to this report.


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after all that they change their minds?  11/4/2009 9:49:00 AM
They are probably going to use taxpayer dollars to fund the decision. Your tax dollars at work...
GM's Opal  11/4/2009 12:34:00 PM
Our own U.S.autoworkers are suffering. Its time for the foreign autoworkers to take it on the chin. These companys have been in bed together for a long time. Our own unions keep crying buy American made. Where can I get a totally American made with American made parts, assembeled in America?
GM  11/4/2009 1:00:00 PM
What the saying, "The more things change, the more they remain the same." So I'm sure there not going to use US taxpayer money to repay the German Government. NOT!! Nice work GM and President Obama. NOT!!! :(
Why should they help the competition.  11/4/2009 1:02:00 PM
Probably a good move for GM. They see the kinds of concessions that the unions would have given Magna and the Russians. Why should they let a future competitor get a sweetheart deal like that.
finally gm does something right  11/4/2009 1:39:00 PM
Keeping Opel absolutely was the right move for GM. If you understand who they use engineering centers in various corners of the world to design cars for sale in multiple regions, then you would see that Opel was a key player in many of GM's recent hits in the US. Furthermore, the sale to Magna/Russia which germany was trying to strong arm would have been disasterous in terms of giving away tech to competitors. China already steals them blind. They don't need russia doing the same. The workers are showing themselves to be whiny socialist brats. They should be glad to offer their parent GM the same concessions they offered the strangers from Magna. The German gov't has been caught red handed trying to coerce the sale to the least suitable suitor in order to protect their political interests at the expense of other countries. Now they are embarassed and are acting like children
German jobs  11/4/2009 1:47:00 PM
I think the German workers are getting heated up over nothing. I don't think Obama is going to let any German workers go; that is not his foreign policy.
Never saw that one coming!  11/4/2009 1:54:00 PM
This serves, in my opinion, to prove that GM management not onlu has no sense, but no idea of right and wrong! Just yesterday, I read that they were buying part of Delphi back at a premium price. Before that, it was choosing to buy rhodium and platinum from other countries, welshing on their contract with an American mine, causing great hardship on the miners. Now, after fiddle farting around for months, they decide...apparently out of the blue...to once again prove that their word is worthless, and back out of the Opel deal. I'll bet they won't be on Germany's Christmas card list! If this is the way they are going to do with OUR money, the GM board and upper management HAS to GO!! Even with a 90% pay cut, Mr. Henderson is gyping the stakeholders. Perhaps they would get the hint when all of the locks were changed on their chrome tower offices, and the elevators no longer stopped on that floor! Seriously, the German and Russian people have been given a royal screwing, without so much as a kiss! Not to mention Magna. And no, they don't "deserve" this because USA auto workers are suffering. Get over that one, and focus your hatred on top GM management, and our splendid administration for allowing such carryings on to happen!
Surprise ?  11/4/2009 2:47:00 PM
The fact that there was no acceptance on the agreement by the government appointed GM board kinda says that there was no agreement. I dont understand what the German workers are all angry about. What is the difference who they will be working for ? If they were gonna lose jobs and take pay cuts for the russians, why wouldnt they do it for GM ? I think the technology going to the russians was a huge concern. Doesnt anybody wonder why the German government wants to get in bed with Russia so badly. Could it be that the oil and other energy that they buy from Russia has any influence ? The outrage is neither logical nor genuine.
G-overnment M-oters at work.  11/4/2009 2:47:00 PM
GM can do what ever they want now that they have the full faith and backing of the Obama adiministration. See what happens when the government controls free enterprise. 60%Gov/40% union ownership! They's send Hillary to fix it all! The president will play golf and go an campign trips.
No big deal  11/4/2009 2:54:00 PM
We all have the right to walk away from the table up until the time a contract is signed. What is everybody griping about? This is life and business as usual, and it happens all the time. The only difference is this time there is a lot of publicity around it. But, don't assume this is the first time something like this has happened. We don't have access to all the information on this one, so we aren't in a position to judge the merits of the decision. And, in the grand scheme of things it's not really that big of a deal. The real issue I see is that the unions were willing to make concessions to Magna but not GM. Go figure. It's not like Chinese companies have a stellar record on treating their employees any better than GM does.
American interests vs Russian  11/4/2009 3:38:00 PM
Clearly the German government is courting favors from the Russians at the expense of American auto technology. Germany should be concerned with jobs, of course, but preferential treatment for the Russians is politics against US interests. A pissing contest of with-drawing government funds vs laying off German workers is going to be a lose-lose game. Germany should give GM the same terms as they give to the Russians. The German government figuring to hit GM while it is down is backfiring because GM has now enough health to have a back bone. We should be protecting American technology interests.
Opel  11/4/2009 3:39:00 PM
Hey ! GM owns it and has for over 60 years. If they decied they don't want to sell it that's their right. Why would they want to "sell" it if they still have to own 45% but have no say in how the company is run? I'm sure if Germany or Magna or the Russian banks want to pay GM for what they have invested in ti they would. Why give it away to a bunch of vultures?
Turbo Capitalism   11/4/2009 5:25:00 PM
Nice phrase. Probably the main difference between Magna and GM at this point is when exactly workers would be cut. Magna could not possibly do any better thn GM considering that Magna would likely lose Volkswagen parts contracts-- cutting which employees exactly who made those parts? Also, supporting employment by hugging the Russian bear only works until the bear has what he wants, just look at the oil company history in Russia. So when the 4.5B euros figuratively runs out, so do the jobs that Germany bought-- turbo capitalism indeed!
Forget Europe  11/4/2009 6:26:00 PM
I am an American worker that got impacted when Avaya purchased a German phone company. They lied about profits and when it came down to layoffs they had to lay us off because the Germans workers are protected by so many laws. Thats why their government is so pissed off they want to pawn off thier workers on to American companies!
Gov control of free enterprise  11/5/2009 6:06:00 AM
Capitalist have it right and so does GM for once, this is strictly business. The Obama haters will scream it's his fault if they get a hang nail. All of a sudden they are worried about screwing the Russians. Give me a break.
Where you can buy and American Made Car  11/5/2009 8:59:00 AM
If you want to buy the most American made car available buy a Honda Accord; except for a few nuts and bolts it's made almost entirely in the USA
Bancrupcy  11/5/2009 1:51:00 PM
A reminder first: don't forget which country is bancrupt - the US not Germany, nor Russia. Being proud is fine (and cost nothing, right) but you're only what are and what you have and do globally - because of the rest of the world dear USAmericans! This is about business that is true - but the dealings of GM in this matter is a showcase of bad business to the core ... well they piched their fight. Germany does not need Opel nor GM, plenty of good manufacturers there - I guess you know. GM needs the German engineering know how of 8,000 engineers - that's the fact (sorry it might hit your arrogance a bit more). German government did want to preserve as much jobs as possible (which in a saturated world market with overproduction is bad), which by now we know that is not on GM's agenda, threatening the German workers with bankrupcy proceedings ... this is a mess that is 100% of GM making. Interesting if the Germans have the guts to stand up for their interest or play again their role as a US pawn .... With Euro200.000 the German government would have spend on each work place for the Magna deal, it's time to realize that the workers might want to quit anyway and Germany should look for a future without GM and Opel.


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