GM Europe Chief Seeks State Aid in Europe

Company says there is not enough time to garner private investment

General Motors said on March 3 it was looking for a Europe-wide solution to turnaround its Opel car-making business and rescue jobs as part of a 3.3-billion-euro cash injection in the company. We are indeed talking to governments outside Germany," said GM Europe head Carl-Peter Forster, a day after executives presented a restructuring proposal to German Economy Minister Karl-Theodor zu Guttenberg.

Forster said the Spanish government had committed to a 200-million-euro guarantee and might be prepared to do more.

Talks with the British government were providing "very positive signals" said Forster, who also mooted talks with Poland.

All those countries have GM production plants.

"All of this has to be together, and all of this, by the way, has to make up the 3.3 billion we're asking for," Forster emphasised. "I think the UK can't expect all the German taxpayers to carry the economic burden, it has to be a shared burden."

He signaled that there was not enough time to garner private investment because negotiations with a corporate entity could take months. "We don't have that luxury," he added.

Forster said the timescale for a response from the German government to the request for public aid was likely to be measured in "days, maybe weeks."

GM Europe directly employs about 50,000 people around the continent and a total of 200,000 to 300,000 could be affected if those working for Opel suppliers or dealers were taken into account, according to executives.

The company's rescue plan also involves $1.2 billion in cost-cutting in Europe, since the company is about 30% overcapacity, equivalent potentially to "three Opel-Vauxhall plants," Forster said. One thing is pretty sure, we have to restructure."

The GM Europe chief said "by far the best solution" would be plant closures, but he acknowledged the need to consider other approaches such as voluntary job departures and "significant" wage concessions.

Forster said the business could be profitable by 2011 with the help of a short- to medium-term public stake to prop up the company and distance itself from its financially plagued U.S. parent, General Motors. But he warned that the depressed car market was likely to last well into 2010.

Unveiling the company's new hybrid-electric Ampera vehicle, which promises low emissions when it goes on sale in 2011, Forster said earlier that he was hoping for more government intervention to stimulate demand.

"In Germany, one of our core markets, governmental intervention has led to additional sales, a factor which is helping to ease the burden of short working in some of our manufacturing plants," Forster said. The German government has introduced a sales incentive for buyers with ageing cars allowing a substantial discount on a new one, an offer that was credited with sparking a 22% spurt in sales of new cars in Germany last month.

Toyota also reported in Geneva that the incentive had boosted sales in Germany in February.

Copyright Agence France-Presse, 2009

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