Tags: EU | Germany | GM | Opel

Opel Asks for Billions in Restructuring Plan

Tuesday, 09 Feb 2010 08:45 AM

General Motors Co.'s Opel unit asked European governments for billions of dollars in aid on Tuesday as it formally presented a restructuring plan that will result in some 8,300 job cuts.

Opel is seeking loans and loan guarantees to the tune of some 2.7 billion euros ($3.7 billion) as part of a program under which it plans to invest 11 billion euros ($15 billion) through 2014. It aims to break even by 2011.

Chef Executive Nick Reilly declined to say how much was being sought from individual countries, but said: "We don't anticipate we will be turned down."

German Economy Minister Rainer Bruederle said GM is seeking loan guarantees covering 1.5 billion euros from the German federal and state governments.

Bruederle was noncommittal, telling reporters that "we will carefully evaluate the documents we now have." He noted that European countries previously agreed that the European Commission should conduct a preliminary evaluation.

Parent General Motors Co. has already injected 600 million euros, along with 650 million euros in advanced payments, to ensure Opel's cash positions.

Reilly said of the process of seeking European aid: "Our estimate is the overall process will take several weeks until it is completed, but we expect to have sufficient liquidity during this period."

He did not elaborate on how far talks with governments have gone. Discussions with Britain, Spain and Austria among others have elicited "a reasonably good response," he said.

Asked at a news conference why Opel couldn't bank on more money from General Motors, which emerged from bankruptcy last year with government help, Reilly said that money is earmarked to pay back U.S. and Canadian government loans and to invest in future technology.

Reilly noted that GM's cash resources are "essentially U.S. taxpayers' money."

"It is not surprising that the U.S. would expect Europe and European governments to help a European entity, and not have the U.S. taxpayer for all of the restructuring and growth of Opel," he added

The governor of Germany's Hesse state, which is home to Opel's Ruesselsheim headquarters, made clear that he wants to see more money from Detroit.

"According to our first assessment, it will be necessary that GM as the owner significantly increase its share in the restructuring and realignment," Roland Koch said, German news agency DAPD reported.

The figure for job losses was in line with that previously given. Opel and British sister brand Vauxhall employ around 48,000 people in Europe, about half of them in Germany.

"We have no time to waste," Reilly said. "We need a plan that is going to be realistic about the tremendous economic pressures we face."

"We are confident that we have a plan for the future that will work and deliver results," he said, adding the company hopes to break even by 2011 and "make a decent profit in 2012."

The job cuts will include 1,300 sales and administration positions along with cuts at most of the automaker's manufacturing plants in Europe, Opel said.

It reiterated that it plans to close the Antwerp, Belgium plant, and let go 2,377 workers there. Production of the Astra HB3 will be transferred to Bochum.

Elsewhere, the company will cut 1,799 jobs in Bochum, Germany; 900 positions in Zaragoza, Spain; 892 in Ruesselsheim, Germany, where Opel is headquartered; 300 at Eisenach, also in Germany; 369 in Luton, England; and 300 in Kaiserslautern, Germany.

However, the plants in Gliwice, Poland and Ellesmere Port, England, are set to escape any cuts.

Opel board member Reinald Hoben said that, independently of the restructuring program, some 2,000 people in Germany previously signed up for early retirement programs will be leaving through 2012 and 2013.

The 8,300 figure includes about 500 of those employees, Hoben said. Of the remaining 1,500, about 650 will replaced will be replaced by new hires to ensure that "critical skills" are maintained, he added.

Reilly said the automaker would focus on three areas: making quality, desirable cars; developing alternative propulsion and expanding into growth markets in the Middle East and Asia.

"Several studies are underway to look at export programs," Reilly said, "but I want to be clear: we are only going to expand in those areas where it is economically viable."


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General Motors Co.'s Opel unit asked European governments for billions of dollars in aid on Tuesday as it formally presented a restructuring plan that will result in some 8,300 job cuts.Opel is seeking loans and loan guarantees to the tune of some 2.7 billion euros ($3.7...
EU,Germany,GM,Opel
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2010-45-09
Tuesday, 09 Feb 2010 08:45 AM
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