'American solution' could be good for Opel

Paul McVeigh a special correspondent for Automotive News Europe
Would it be a bad thing if the German government refuses to give General Motors Co.'s Opel/Vauxhall unit loan guarantees toward a planned 3.7 billion ($4.52 billion) restructuring of the money-losing division?

Probably not. Opel will survive -- GM has said it won't allow Opel to fail and it has the cash to restructure the unit.

But GM would have to fall back on what the German press is calling the "American solution," meaning there will be more Opel factory closures and many thousands more job losses than the 8,400 already envisaged.

Opel already plans to close a factory in Antwerp, Belgium. Without German bailout aid, two car plants in the economically depressed German cities of Bochum and Eisenach would be at risk.

That's why local politicians and unions are getting increasingly nervous.

The head of the German union umbrella federation DGB in Rhineland-Palatinate, which is home to Opel's Kaiserslautern plant, says the German government's dithering is "unbearable."

The east German state of Thuringia, which is home to Opel's Eisenach plant, has promised 27.2 million euros in guarantees, a mere drop in the ocean compared with Opel's request for 1.3 billion euros from Germany's rescue fund for companies hit by the economic crisis.

There are no signs that the Berlin government will rush to Opel's aid. But with Europe's new-car market expected to fall by at least 1 million units this year, perhaps an American solution will result in a leaner, post-crisis Opel.