General Motors recently shocked the automotive world with a surprise reverse on the sale of its Opel subsidiary to a consortium led by automotive parts supplier Magna and Russian bank Sberbank Rossi, by announcing that it plans to keep the Rüsselsheim-based operation.
This is in complete contradiction to the agreements made with the Sberbank-Magna group in June that would have seen the General retain 35 per cent ownership, in the interests of continued technology and development sharing, while the Russian-government controlled Sberbank (who would have provided most of the financing backing for the deal) would have got 35 per cent, Magna 20 per cent – with the remaining 10 per cent reserved for Opel employees.
Now that the economic situation in Europe is gradually improving and GM is a bit stronger thanks to a huge government bailout, the Detroit giant is singing a different tune altogether, and has decided to restructure Opel accordingly. Unfortunately, the reshuffle at Opel/Vauxhall under GM could see as much as 10 000 jobs on the line, and would require plenty of buy-in from other EU governments to go smoothly.
“GM will soon present its restructuring plan to Germany and other governments and hopes for its favourable consideration,” said GM president and CEO Fritz Henderson. According to Henderson the decision by its 13-member board to keep Opel was “deemed to be the most stable and least costly approach for securing Opel/Vauxhall’s long-term future.”
In an interview with Reuters, GM Europe interim head Nick Reilly said that Opel was just as well off under the General’s control as it would have been under the Sberbank-Magna consortium. “Our plan is very similar to Magna’s. I don’t think it’s worse,” Reilly told Reuters.
If it fails to secure funding for the turnaround plan for Opel from European governments next month, GM might have to turn to funds from the United States government.
