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General Motors has decided not to sell its European subsidiary, Opel. And that has the German government fuming. Reporter Brett Neely has the story from Berlin.
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MARCO WERMAN: I’m Marco Werman and this is The World. General Motors had it all planned. The car maker was going to sell its European unit Opel. GM had a buyer lined up – a Canadian car parts firm called Magna. But now GM has abandoned the sale. A company spokesman says GM will revert to its original restructuring plan for Opel. Reactions have been mixed in Europe but not in one European country. Germany had offered big loans to secure the sale of Opel. Now that the deal’s fallen through the German’s are furious. Brett Neely reports from Berlin.
BRETT NEELY: The fate of Opel has been corporate Germany’s biggest soap opera. The German government lent the near-bankrupt company more than two billion dollars last spring. The idea was to keep Opel afloat until it found a new owner. Now that GM has spurred Magna’s overtures the German government also feels jilted.
RAINER BRUEDERLE: [SPEAKING GERMAN]
NEELY: In Berlin today German Economy Minister Rainer Bruederle said GM’s behavior was quote totally unacceptable and said GM was to blame for the deals collapse. The negotiations involving the government, Opel, and Magna have been going on and off since February. So why did GM back out now just weeks before the deal was due to be closed? In some ways says Coventry Business School professor David Bailey it’s not a surprise. With economies in Europe and the US recovering and GM out of bankruptcy things have changed since last spring.
DAVID BAILEY: Clearly GM thinks that their financial position is such that they can afford to restructure GM in Europe.
NEELY: Magna also wanted to take over Opel’s technology center in Ruesselsheim outside Frankfurt. Opel’s developing a new generation of small fuel efficient cars there – something that GM desperately needs says Bailey.
BAILEY: GM actually needs GM Europe to produce the small cars that it will have to sell in America in order to meet its environmental obligations.
NEELY: He says Magna had planned to take that technology and transfer it to its Russian partners and that might of squeezed GM out of a growing Russian car market. GM says it will need about 4.5 billion dollars to restructure Opel, far less than Magna needed. Bailey says GM might be able to come up with some of that money itself though it can’t use any of the money lent to it by the US government.
BAILEY: I also think that they will probably go to European governments, including the German government, and ask for financial assistance. So I think they will be back knocking on the door asking for support.
NEELY: Belgium, Britain, and Spain all have Opel plants and their government signaled today they’re willing to talk. Still Opel’s 25,000 German workers are upset by GM’s about face. Here’s what some of them at a factory in Bochum had to say today.
FIRST MAN: [SPEAKING GERMAN]
TRANSLATOR: It’s not nice. I have no idea what else will be happening here in Bochum if Magna doesn’t take over. There are rumors that Opel in Bochum will be closed now. Let’s wait and see.
SECOND MAN: [SPEAKING GERMAN]
TRANSLATOR: Anyone could have guessed that GM would keep Opel. I knew it.
NEELY: German unions are planning a protest strike tomorrow and they’re urging other Opel workers in Europe to join. The drama’s not likely to end soon. Like any soap opera stay tuned for the next episode. For The World I’m Brett Neely in Berlin.
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