Union backlash as aid decision delayed
26 May 2010

The German government's rescue fund committee has delayed a decision on whether to guarantee loans that would help secure Vauxhall/Opel's restructuring plan.

Vauxhall/Opel's £3.2 billion restructuring plan includes about £1.1bn of loan guarantees that are needed to help the company reduce European production and cut its workforce by 20 per cent.

Although a decision wa sexpected this week, Germany's Economics Minister Rainer Bruederle said a decision on loan guarantees would now not come until late May or early June.

Government officials are justifying the delay by saying Vauxhall/Opel is not in any danger of collapse. Vauxhall/Opel first requested aid 18 months ago.

The decision has prompted a backlash from workers' unions in Germany.

"While all other countries in Europe affected have long since decided (in favor of aid) for Opel, the German government economic policy is still spinning in circles," said Armin Schild, regional union boss from IG Metall Frankfurt.

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26 May 2010

[quote Autocar]"While all other countries in Europe affected have long since decided (in favor of aid) for Opel, the German government economic policy is still spinning in circles," said Armin Schild, regional union boss from IG Metall Frankfurt.[/quote]

- not true:

'Possible targets for cuts include an £80m loan to Sheffield Forgemasters, a £20m loan to Nissan to develop green cars, and £270m of support for General Motors/Vauxhall.' http://www.guardian.co.uk/politics/2010/may/24/george-osborne-spending-cuts-where-bite

The whole premise of GM's European restructuring thing was to get the individual European countries to outbid each other for retention of GM jobs in their country. This, to GM's nightmare, is now looking like going into reverse, where instead of a bidding war - with Mandelson casually lobbing a quarter of a billion of taxpayer pounds - there is now becoming a dutch auction, with countries outdoing each other in how little funds they will offer up to GM. Tough titty GM. Looks like GM will have to fund its 'investment' in Opel/Vauxhall more by itself - something novel for GM. Looks like Reilly's plan's backfired.

26 May 2010

GM messed everyone about and then forgot that once the German elections had passed so to would the pressure to be seen to save German Opel jobs. With the Belgium plant closing and Russelsheim's future secured, why should the Germans bail out GM Europe?

VW, Ford, Daimler and BMW are not asking for money to continue production in Germany.

26 May 2010

Am I missing something here? I thought these were loan guarantees and not loans. They're not putting up any money; just guaranteeing that, should GM default, they'll pick up the tab.

26 May 2010

[quote Straff]

Am I missing something here? I thought these were loan guarantees and not loans. They're not putting up any money; just guaranteeing that, should GM default, they'll pick up the tab.

[/quote]Straff

Not sure of the point you are making. GM are asking the German governement to act as guarantor

The money is still borrowed by GM but they ask the German government to guarantee if they default, for which its usual to pay a premium on the loan. Hard to see what the finesse point is you are making? So why do they want to do so for a company that's asking for something no other manufacturer needs and to a company that went back on its word?

26 May 2010

I agree; Germany shouldn’t give GM anything. GM should close the Bochum plant and move the work to Gliwice if they need the extra capacity in the future. They just need to trim the fat.

You don’t need a weatherman
To know which way the wind blows
—Robert Allen Zimmerman

26 May 2010

Because the German Government are not having to find the cash (presumably it's all now in Bank of Nikosia). This is like giving a personal guarantee for a business; as long as there is not a problem with repayment it's never called upon. I'm not suggesting that anyone would enter into such a thing lightly but there is less of a problem than first appears.

26 May 2010

Sorry; multi-tasking again. That should have said 'Bank of Athens'. I don't want to upset our Greek and Turkish Cypriot friends...

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