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Opel turnaround 'would cost GM twice as much'
2009-11-13
BERLIN (AFP) - General Motors will have to spend at least twice the three billion euros (4.5 billion dollars) it is budgeting to turn around its European unit Opel/Vauxhall, a union chief predicts. "I think that a restructuring involving a progressive strategy will cost more than six billion, or nearer seven billion euros," Armin Schild, an IG-Metall official who sits on Opel's supervisory board, told the weekly Witschaftwoche. "I am wondering where the money will come from," he said in an interview to be published in Monday's edition of the magazine. International ratings agency Moody's has estimated the cost of the restructuring at five billion euros, according to a German press report Tuesday. General Motors has named executive vice president Nick Reilly as interim head of the unit to "oversee the creation of a strategy to position Opel/Vauxhall for long-term success." The US giant had signed a preliminary deal in September to sell a majority stake in Opel but changed its mind last month, embarrassing the German government and raising fears of sizeable job cuts. The move also prompted the departure of Opel boss Carl-Peter Forster. Berlin had strongly backed a sale to Canadian auto parts maker Magna International and state-owned Russian lender Sberbank, but roused suspicions that it was in return for lower job losses in German plants. Other European countries where Opel has factories like Britain, home to Vauxhall, Spain and Poland feared they would bear the brunt of the sale. The proposed deal also caught the attention of EU regulators, who were checking whether German aid was only offered to Magna, and not to other bidders, and therefore broke EU rules. Berlin may finally cough up aid in any case, as GM asks European governments including Germany to provide part of the cash it needs to turn Opel around. The weekly Der Spiegel predicted Saturday that despite some argument within the new centre-right coalition government, Chancellor Angela Merkel and Finance Minister Wolfgang Schaueble were prepared in principle to assist GM. However union leader Schild expressed doubt that GM had executives competent to restructure Opel or would give them sufficient autonomy. According to the Sunday paper Welt am Sonntag, quoting "well-informed" sources, the Opel board will decide next month who will be the company's new permanent chief. It said there were two possible candidates to succeed Forster, without naming them. Meanwhile an Opel spokesman said GM would be moving its European headquarters from Zurich to Ruesselsheim, Opel's base in Germany. The spokesman gave no date for the move and no indication of how many jobs would be involved. GM subsidiary Chevrolet would still be run from the Swiss city, he said.
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