GM’s Opel Reversal – a Tough Lesson for Politicians?

GM’s Opel Reversal – a Tough Lesson for Politicians? The German government fought for months with great perseverance to save the GM subsidiary Opel. After tough negotiations, the parties involved had finally agreed to the sale of Opel to the automotive parts supplier Magna. The future of the car manufacturer appeared to have been secured. Then came the completely unexpected about-face: General Motors let the Magna deal fall through and announced that they planned to keep Opel. That announcement came on the very day that the German Chancellor had addressed the US congress. It was a huge embarrassment for Angela Merkel, a source of indignation within the ranks of German politics and a bitter disappointment for Opel workers. The terse explanation from Detroit was that after overcoming insolvency, GM was in a position to restructure itself and that Opel's experience in the small car market would play an important role in the firm's future strategy. General Motors CEO Fritz Henderson is now in Germany trying to pour oil on the troubled waters. He says GM does not intend to cut any more jobs than the 10,000 planned by Magna. The chancellor and all the other German politicians involved have demanded a new plan for recapitalization, and for 1.5 billion euros in state loans to be returned. Until now, this loan has saved Opel from going under. Whether GM will request state aid is still unclear. But the central and state governments have indicated that, under certain circumstances, they would be prepared to contribute funding to GM's plans for Opel. Would that be sensible after what has occured? Would not insolvency have been a better option right from the beginning? Where do US-German relations stand now that GM has taken Berlin for a ride? The politicians' efforts on behalf of Opel have also caused resentment in the upper echelons of VW, BMW and Mercedes, who say the Opel rescue saw a poorly managed firm being nursed back to health to the disadvantage of co...

Channel: Deutsche Welle Video Length: 26m 30s Date Found: Wed, Dec 09 2009 10:49 PM Category: News Date Produced: View Count: 0