Germany, US Set Up Working Group to Save GM′s Opel | Business| Economy and finance news from a German perspective | DW | 22.02.2009
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Germany, US Set Up Working Group to Save GM's Opel

Germany's new economics minister said he had set up an informal working group with the US treasury secretary in order to find a way to save General Motor's struggling German offshoot Opel.

Opel sign seen through a windshield partially covered by snow

Not exactly a winter fairy-tale: Opel is struggling for survival

Karl-Theodor zu Guttenberg said he had contacted Timothy Geithner in Washington about setting up a working group in the hope of finding a way to secure the future of Opel, according to Bild am Sonntag.

"I will use my first visit to the USA in March to hold further talks" on the issue, Guttenberg was quoted as saying.

The minister said that the basis of any rescue plan for GM's German division had to be a solid proposal from the beleaguered US corporation.

"It is urgent that General Motors and Opel quickly present a substantial idea on how they plan to save jobs on an economically sound basis," Guttenberg said.

The minister's remarks came one day after a report in Bild that Opel might go bankrupt by May or June if public assistance was not forthcoming.

A cash injection needed

A currency exchange employee changes euros and U.S. dollars in an exchange kiosk

Opel needs a large amount of cash in order stay afloat

Opel reportedly needs a cash injection of up to 3.3 billion euro ($4.2 billion), but has not found a bank willing to fund the required credits, the newspaper stated. The car maker has neither confirmed nor denied these figures, while suggesting nonetheless that it needed more aid.

Stressing the urgency of the situation, Germany's foreign minister also appealed for international help.

"We have to look further than our own backyard," Frank-Walter Steinmeier told the daily Rheinische Post on Saturday. "No car factory is capable of surviving alone in Germany or elsewhere."

"We must act on an international and European level to preserve jobs in a sustainable manner in Russelsheim, Kaiserslautern, Bochum and Eisenach," he said, listing Opel's main factories in Germany.

Slumping auto sales

General Motors Corp. headquarters in Detroit

Ailing car manufacturer General Motors has asked the US government to step in

Like its rivals, Opel has been slammed by slumping auto sales, especially in Europe.

Directors of Opel's troubled US parent company General Motors opened the door this week to an Opel spin-off within the framework of a broad restructuring of GM's whole business.

Earlier this week, GM presented its shake-up plan to the US treasury on Tuesday as a condition of its $13.4 billion (10.5 billion euros) government bridging loan. It pledged to cut 47,000 jobs worldwide, to close plants, dump brands and slash production, notably in Europe where it seeks to save more than one billion euros.

The plan also depends upon receiving six billion dollars in funding support from the governments of Canada, Germany, the United Kingdom, Sweden, and Thailand "to provide liquidity specifically for GM's operations in these countries," it said.

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