Feeling ditched after six months of negotiations, German officials reacted angrily on 4 November to US car maker General Motor’s decision to keep its European business, Opel, rather than sell a majority stake to a consortium backed by Berlin.
The GM board voted on 3 November against the planned sale of a majority stake to Magna, ending months of uncertainty and placing pressure on the German government which had backed the deal with hefty state guarantees.
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,” the Detroit-based carmaker said in a statement.
The decision provoked anger in Germany, where Chancellor Angela Merkel has lobbied since May for the sale of 55% of Opel to Magna and its Russian partners, Sberbank and Gaz autos. The deal to “save” Opel by selling it to Canadian-Austrian firm Magna was a key issue ahead of Germany’s September general election.
German Economics Minister Rainer Bruederle called GM’s behavior “entirely unacceptable,” as workers at the firm’s German plants called for immediate strikes. Bruederle demanded that GM repay a €1.5 billion ($2.2 billion) bridging loan, pledged by Merkel’s government to keep Opel’s operations going ahead of a Magna takeover.
In Britain meanwhile, GM’s decision was welcomed by trade unionists, who had feared that a German-backed Magna deal could lead to the closure of factories belonging to Opel’s UK brand, Vauxhall. “This is the best decision for Great Britain and our factories,” said Tony Woodley, head of the trade union Unite. Vauxhall’s factories in Ellesmere Port and Luton employ 5,500 people.
GM’s European subsidiary also has factories in Spain, Poland, Belgium and Austria. About half of Opel’s 50,000 workers are employed in Germany.
Two weeks ago, the European Union’s competition regulators raised a red flag that the GM-Magna deal may have been unduly influenced by political pressure from Berlin, which appeared to be arm-twisting GM by limiting its money offer to the Magna bid.
GM’s chief executive, Fritz Henderson, said that the company would present a revamping plan to European governments soon, which would probably include plant closings and job cuts. The company said it expected to spend €3 billion, or $4.4 billion, to downsize operations, which it said was “significantly lower” than what Magna and other bidders had projected. “This was deemed to be the most stable and least costly approach for securing Opel/Vauxhaull’s long-term future,” Henderson said in a statement.