Opel Bailout
March 2, 2009
Germany's new Economics Minister Karl-Theodor zu Guttenberg said the government had not yet made up its mind and would not allow itself to be put under "time pressure."
Opel's CEO, Hans Demant, and the head of the Europe division of parent company General Motors, Carl-Peter Forster, were in Berlin to make a case for the bailout
Forster said that the company needed 3.3 billion euros (4.2 billion dollars) Europe-wide to survive. "We are agreed that we will ask other countries, in which we have significant activities, to contribute to this financing requirement. How much and how this will happen still needs to be discussed," Forster said.
Reading the fine print
The economics minister said the company's restructuring plan first had to be examined in detail.
"We will examine, we will evaluate and on the basis of this evaluation we will work out whether a further government decision is required," Guttenberg said.
Guttenberg said that he would clear up any unanswered questions with Opel's parent company GM and the US government during a trip to the United States in March.
Government spokesman Ulrich Wilhelm echoed Guttenberg's sentiments. He said that Opel was subject to the same procedures as other firms looking for state assistance.
Wilhelm said the company's business plan would first be checked by independent financial auditors to determine its sustainability.
Cautious approach
Guttenberg has been careful to avoid premature promises, telling Germany's ARD television ahead of the meeting that the German government would conduct a "very far-reaching examination" of the company's proposals to ensure that Opel has "a truly viable perspective for the future."
German Chancellor Angela Merkel has also been cautious, on Saturday reminding fellow party members at a Christian Democratic Union meeting that there were "clear rules" governing state aid.
Berlin has already stipulated that no state aid would be allowed to flow into the coffers of its US-based parent company GM in Detroit. A spokesman for the German government said Monday that another major concern for Berlin was ensuring that German taxpayers' money did not got towards saving jobs in the US.
Job cuts likely
Even with a boost from Berlin, it's likely that GM will be forced to strike thousands of jobs across Europe, according to media reports.
Germany's daily Leipziger Volkszeitung said up to 8,000 of the conglomerate's 50,000 jobs in Europe were in jeopardy, while the Sueddeutsche Zeitung put the number of endangered positions at 11,000.
Guttenberg has said he plans to meet with the economics ministers of the four German states where Opel plants are located: North Rhine-Westphalia, Rhineland Palatinate, Hesse and Thuringia. A portion of the government bailout is likely to come from the state budgets. Some 25,000 people in Germany are employed by Opel.