This weekend, the 2 candidates of the genereral election in Germany took both credit to save Opel from bankruptcy and its 4 factories in Germany from closure. Angela Merkel and Frank-Walter Steinmeier have really nothing to be proud of because the deal they announced a few weeks ago to sell 55% of the European arm of general Motors to a group that consist of Magna, an Austro-Canadian auto parts firm, and Sberbank.
The other factories(Belgium, Britain and Spain) asked Nelie Kroes, Europe’s competition commissioner, to look if Germany infringed EU rules.
The deal the Germans forced to do was really the worst they could do if you see the other options in terms of industrial logic. This facts make it very likely that the loans lavished on Magna and Sberbank will never be repaid. General motors’ declared that they are not happy with the forced sell to Magna and Sberbank. The Russian retail bank wants to make Opel’s technology available to its client GAZ which is Russia’s second-biggest carmaker.
Since the German government knew that GM was heading for bankruptcy they only though in the sense of short-term expediency, what was good for themselves instead of handling with the long-term health of the European car industry. In Germany this industry is very important so those negotiations are vital.
Opel is in really big problems although they make good cars. The problems is that there are twice as many factories as its needs. The loss is also caused by losing market share to Volkswagen and ford and if they should decide to do a big restructuring, the problems would not be solved. Even the Chairman Klauz Franz has no answer to the problems.
Just say nein
The government said that of the three proposals on the table(Fiat, RHJ Int, and a Belgian private equity) only Magna had the opportunity because they promised to keep every Opel factory open regardless of its efficiency. The German government’s two nominees to the Opel trust board, who they set up to run the company until it is sold, could bring themselves to support the plan. One of them, Manfred Wennemer, declared: “The state carries the entire risk. We don’t have a solution that will eventually turn Opel into a competitive company.” Were it not for Mr Stronach’s(chairman Magna) lifetime ambition to own a carmaker, even Magna might be having second thoughts.
Two of its biggest customers, BMW and VW told that they are worried about the possible incoming conflicts of interest and could start their business elsewhere. So the conclusion is, this deal stinks! We will see the possibilities after the elections.
Team version
Jens Vanderstappen,Michiel Van Hulle, Jérôme Santy,Mathias Teirlynck
Sep 24th 2009
From The Economist print edition
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