German gov't accused of sabotaging Opel turnaround

Paul McVeigh is News Editor of Automotive News Europe
German states with Opel factories are getting increasingly annoyed at the national government's reluctance to provide General Motors with financial aid to help the automaker restructure its European operations. One regional politician has even accused Berlin of aiming to sabotage GM's turnaround plan for Opel/Vauxhall.

The German government appears not to have gotten over GM's 180-degree turn last November when it decided to keep Opel instead of selling it to Canadian supplier Magna International and its Russian backers.

GM has asked European governments with Opel factories for loans or loan guarantees toward 3.3 billion euros it says is needed to run Opel while the five-year restructuring is carried out.

Germany, where Opel is based, is home to half of GM's 48,000 European work force, so it's being ask to contribute the lion's share of the aid but Berlin has found many excuses to delay a decision.

First, German Economy Minister Rainer Bruederle said an independent auditor should check if the plan was financially sound. GM hired Warth & Klein, one of Germany's largest auditing companies, which said the plan had weak points but was viable.

Next, Bruederle said the European Commission should first approve state financial help for Opel. Brussels replied that it was up to individual countries to agree on aid.

Then, Bruederle, who took over as economy minister on Oct. 28, days before GM decided to keep Opel, said the U.S. automaker should contribute at least half of the 3.3 billion euros before government aid could be considered. At the Geneva auto show last week, GM met his demand, saying it had tripled its previous investment pledge for Opel to 1.9 billion euros.

A day after GM's Geneva announcement Bruederle said nothing had changed and he had no plans to meet Opel CEO Nick Reilly or the heads of German states with Opel factories.

Matthias Machnig, the economy minister of the east German state of Thuringia, is losing patience. He told the German magazine Focus last week that he believes that Berlin is trying to torpedo the plan by making endless new demands on GM and briefing journalists privately that it might be better for Opel to fix its troubles through insolvency.

"Time is running out. GM has shown that it wants to give Opel a long-term future. The constant discussion about Opel's future is damaging the brand and weakening trust," said Machnig, whose state is home to Opel's Eisenach factory, which builds the Corsa subcompact.

Earlier this year, Thuringia and other states with Opel factories sent a letter to German Chancellor Angela Merkel demanding that talks on Opel aid be sped up.

In the coming weeks, Bruederle's tough stance will be tested as voices calling on Berlin to agree to help Opel become louder.