GENERAL MOTORS presented its rescue plan for its troubled subsidiary Opel yesterday, combining 8,300 job cuts with a request for €2.7 billion in loans and guarantees from European governments.
Mr Nick Reilly, the newly-appointed boss of Opel, confirmed that the company’s Antwerp plant is to close with a loss of more than 2,300 jobs while nearly 4,000 jobs are to go in Germany.
The cornerstones of the Opel rescue plan are a 20 per cent reduction in production capacity and a €11 billion “product offensive” with new models to lure back customers.
“We have no time to waste,” said Mr Reilly, a 59-year-old British executive best known for ironing the creases out of GM’s takeover of Daewoo in 2002. Mr Reilly said the €11 billion plan for restructuring and new models was a “road map to success”.
State support is required for the plan because, he said, “it is not an option” to raise credit from private investors.
But European governments could be forgiven for reacting with scepticism to GM’s plan.
Eyebrows were raised in Berlin at GM’s request for Germany to bring €1.5 billion to the table, some 60 per cent of the total aid request and more than twice the company’s own €600 million contribution.
Leading German politicians including Chancellor Angela Merkel lost several nights’ sleep negotiating credit packages and rescue plans for the crisis-hit Opel last year, only for GM to back out of the sale in November.
“We will carefully examine the documents,” was the diplomatic response from economics minister Rainer Brüderle to a GM external auditor’s report.
In the end, Berlin may have no choice but to play along with GM.
Chancellor Merkel’s government knows it has to be seen to be tackling rising unemployment ahead of an state election in May in North-Rhine Westphalia, where some Opel plants are based.
The EU competition watchdog warned yesterday that it would examine closely any state aid to the company to prevent market distortions.
A preliminary plan presented by Opel last year was acceptable, it said, and a competition spokesperson said it was not aware of any “material changes” to the plan in its latest form.
Even if GM wins state support, industry analysts suggest that Opel/GM will have to sweeten the deal for governments and provide greater details on its plan to cut capacity by 20 per cent and return to profit by 2012.
“It’s not hard to get back into the black for a year but to do so sustainably is more difficult,” said auto analyst Dr Stefan Pretzel. “Opel is in a very difficult situation because its competitors have done their homework already on restructuring, a road Opel is only heading down now.”
