Tense Wait as GM Board Mulls Opel Fate

Sept. 9, 2009
Automaker's board meets in Detroit while unions, German government push for speedy resolution.

General Motors was expected to reach a decision today on the fate of European subsidiary Opel after weeks of delays, which have drawn ire from the German government and unions.

The move could affect tens of thousands of jobs across Europe, including 25,000 at Opel plants in Germany, as well as boosting a giant reconfiguration of the global auto industry brought on by the world economic crisis.

The U.S. auto giant's board began a two-day meeting in Detroit on Tuesday, as union sources in Europe said they expected the board to answer their plea for a speedy resolution and German officials upped the pressure.

"It is important for the employees and Opel plants in Germany that we are informed as soon as possible," Michael Meister, a top adviser to German Chancellor Angela Merkel told AFP in an interview on Wednesday.

Meister called for a "quick decision" from General Motors.

But according to a report Wednesday in the Wall Street Journal, quoting a source close to the matter, the GM board may end up postponing any move on Opel until later this month -- a delay that would spark anger in Europe.

"It's conceivable that they will not make a decision," the source said.

While board directors are also working on selling two of GM's other brands, Hummer and Saturn, Opel is the focus of talks, the report said.

The European unions at Opel and its British twin Vauxhall published an open letter on Tuesday imploring GM to decide on its European brands.

The deal would include all of GM Europe's operations except for Swedish unit Saab, which is being sold separately to luxury carmaker Koenigsegg.

Berlin favors a sale to a consortium made up of Canadian auto parts maker Magna International and Russian state lender Sberbank, but GM is also considering an offer by the Belgian holding group RHJ.

The U.S. auto giant could also keep the unit it has owned for 80 years.

Germany Hopes 'Current Vacuum Will Finally Be Filled'

German Finance Minister Peer Steinbrueck discussed the matter with his U.S. counterpart Timothy Geithner at a G20 meeting on Saturday, and indicated that he was expecting a decision by the board this week.

Steinbrueck said he told Geithner "that we are very much interested that the current vacuum will finally be filled."

"The government still favors the industrial policy concept of Magna and therefore this partner," he added.

The U.S. government, which holds a 60% stake in GM, has said it will not get involved in negotiations.

Steinbrueck acknowledged that "the decisions will clearly be made based on the very narrow economic interests of General Motors."

But he noted that Germany's willingness to provide up to $4.5 billion in aid to Opel "is clearly linked to this partner."

GM has been dragging its feet on deciding the fate of Opel since it emerged from bankruptcy protection after a massive government bailout on July 10.

The company had said it was interested in selling a majority stake in its European operations.

But recent press reports have speculated that the "new GM" would like to preserve the brands in order to maintain access to the European market and help it develop smaller, more fuel-efficient vehicles.

The Wall Street Journal also said last week that GM expected to get 1 billion euros (U.S. $1.4 billion) in public aid from Britain, Poland and Spain on top of state support already provided by Germany.

GM rival Chrysler, which emerged from bankruptcy a month earlier, also has a foot in Europe through its alliance with Italy's Fiat.

Keeping Opel within GM would be a blow for Chancellor Angela Merkel, who is in the midst of campaigning for the Sept. 27 elections. She recently renewed her support for the Magna-Sberbank bid.

The head of General Motors in Europe said last week that Magna-Sberbank would "most likely" win the drawn-out battle to take over Opel but did not rule out that GM could keep control of its European operations.

Copyright Agence France-Presse, 2009

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