GM to Keep Opel
03 November 2009
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. 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.
—Fritz Henderson, president and CEO
On a preliminary basis, the GM plan entails total restructuring expenses of about €3 billion (US$4.4 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, GM said.
Henderson added that GM also hopes to build on its already significant business in Russia and to resume work directly with GAZ to contribute to both the modernization of its operations and the joint development of the Russian vehicle market on a mutually attractive basis.
This really shouldn't be a surprise. Opel is a solid brand with popular cars...the mostly german employees have had a good thing going for decades - selling the brand would mean change & uncertainty, things that established german unions probably wouldn't be good at handling.
Posted by: ejj | 03 November 2009 at 06:00 PM
Germany does not have a shortage of vehicle producers or other car production capabilities.
MB, VW enterprises and BMW could produce more than the market can take.
Could the Russian involvement + GM current ownership have something to do with GM's change of mind?
Posted by: HarveyD | 04 November 2009 at 06:36 AM
Except of course that this action has angered both the German gov't and the unions. The unions are threatening strikes. Check the news.
Looking at the article, it looks like GM itself is looking to leverage itself into the expanding Russian market like Magna was planning to do itself when it wanted to acquire Opel.
Wonder if any of the Magna plans are going to be co-opted by GM. Time for the lawsuits to start flowing. At minimum, the German gov't is looking to get paid back.
Posted by: aym | 04 November 2009 at 08:34 AM
I would judge from this decision, and the marketplace results for post C4C, that GM is much closer to being profitable than many have assumed.
First Daewoo was stabilized for the longterm with an equity offering, for which GM subscribed a significant amount. Now this decision to spend monies to handle the European operations,and cement Opel into the GM firmament, but only on a rationalized basis.
Note that the German elections are done; and other EU countries have mobilized and have objected to Germany allowing the closure of all non German Opel plants. Magna became tarnished as a White Knight when they too, revealed major layoffs and plant closures as part of their takeover.
The ignorant Unions thought that only the mean and nasty Americans would actually threaten their jobs. Well, Welcome to the Real World, Herr kinder.
Reading the tea leaves, it appears that GM is coming back, very rapidly.
PS: Is Mr. Weber suddenly regretting his decision to go back to Germany?
Posted by: Stan Peterson | 04 November 2009 at 10:28 AM
Rats... Angela Merkle gets shot down on her direct plea to a Democratic Congress for a climate bill - and GM is going to save Opel jobs. This has been in the works since Waggoner and Lutz schemed to pare down a new lean and green GM.
BTW, the new puppet Fritz actually suggested changing the name to "Green Motors." After all it's GM that's driving the world's most advanced cellulosic biofuel process at Coskata. Whadda country.
Posted by: sulleny | 04 November 2009 at 11:47 AM
GM was buying time and waited for after the elections to cancel the almost done deal. Whoever devised and played the trick is naive and short-sighted.
In the short term it could benefit GM, in the long term not good for the US.
Germans have being taken for suckers, but they have very long memory. It basically tells them that the US is not a partner who can be trusted, they already learned that in the last couple of yrs, during GFC. It will move Germany closer to Russia and China - they need Germany.
Posted by: MG | 04 November 2009 at 05:23 PM
Um... No, Germans will keep their jobs because GM will not shut down manufacturing the way the other bidders would. Jobs=good trading partners.
Posted by: sulleny | 04 November 2009 at 05:50 PM