- The Washington Times - Saturday, September 12, 2009

BERLIN | GM’s decision to sell Opel to Canadian auto-parts-maker Magna International and a Russian bank was a political victory for German Chancellor Angela Merkel, but the carmaker’s future success is far from guaranteed.

Faced with restructuring and a tough global automobile market, critics maintain that a deal driven by election year pressure may not save Opel in the long run.

Guido Westerwelle, whose opposition Free Democratic Party wants to govern with Ms. Merkel’s party after the Sept. 27 elections, said the vague details of the deal to have been made public suggest “an attempt to bolster the ruling parties during the election campaign.”

“I fear the worst is yet to come - after the election,” Mr. Westerwelle told broadcaster ZDF after the deal was announced.

Securing Opel, which employs some 49,000 workers in Europe and built 1.7 million cars in 2008, will require a restructuring that may include layoffs and plant closures, as well as a complicated new business arrangement.

German Economic Minister Karl-Theodor von Guttenberg, who originally proposed the Magna bid, acknowledged that Magna will have to restructure Opel drastically to keep it competitive. “That requires a lot of work,” Mr. Guttenberg told ZDF.

Magna Chairman Frank Stronach told the Austrian daily Oesterreich that Opel hadn’t made a profit in a long time and that the slow economy would weigh on a new Opel.

“It will be tough going for everyone involved,” he was quoted as saying.

General Motors Co. announced Thursday it would sell 55 percent of its Ruesselsheim, Germany-based Adam Opel and Vauxhall unit to Magna International Inc. and Russian lender Sberbank in a partnership that includes Russian automaker OAO GAZ. The deal lets GM keep a minority stake and cooperate on product development organization, sharing Opel’s technology and engineering resources.

GM had sought to unload Opel since it ran into severe financial trouble late last year, seeking state help in November 2008. Its European operations, which then included Saab, saw an operating loss of about $2 billion in the first quarter and nearly $4 billion in losses between 2006 and 2008.

Industry analysts say the Opel unit has too many employees and too much factory capacity for its sales level and that its costs are too high. The deal still depends on conditions that could take weeks or months to work out, such as final agreement for government financing and union support.

At a press conference Thursday meant to tout the deal to reporters, two representatives of the interim trust controlling Opel denounced it as political opportunism, partially because it favored German facilities over those in other countries.

“I would not have accepted this job if I had known from the beginning that there would be a political rather than a commercial decision,” Dirk Pfeil said, adding that he preferred a more “Europe-friendly” bid from Belgian-based private equity group RHJ International. Mr. Pfeil was appointed to represent the German government on the five-member board and abstained from voting.

“The RHJ bid meant that more workers would be dismissed in Germany but fewer in Europe,” he said.

John Smith, GM’s chief negotiator for the deal, said Magna planned to keep all four Opel plants in Germany open but could shift production from a Zaragoza, Spain, plant to Eisenach, Germany, and would “wind down” work at a factory in Antwerp, Belgium, where 2,200 workers build the Corsa compact car.

The Belgian government said Friday it wants the European Union to investigate the Magna deal for evidence that Germany sought to protect its own plants.

Besides plants in Germany and Belgium, Opel has factories in Poland, Portugal and Spain, and sister brand Vauxhall has plants in Britain.

Manfred Wennemer, the former CEO of auto-parts-maker Continental AG, represented the four German states with Opel factories on the trust board. Yet he voted against Magna.

“I believe we do not have a solution which will turn Opel into a competitive company at the end of the day,” Mr. Wennemer said.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide