Big change

The failed deal to purchase Opel became a “lesson for Russia”

General Motors' refusal to sell its German asset, Opel, to the Canadian-Russian consortium Magna-Sberbank came as a surprise not only to the market, but also to Prime Minister Vladimir Putin. But this does not harm Russia’s interests, he said yesterday at the government presidium. “This speaks to the peculiar relationship of American partners with their counterparties,” the prime minister added. The situation around the Opel deal is “a lesson for Russia that will need to be taken into account in the future,” he said. “We will have to take into account this style of relationships with partners in the future, although the disdainful attitude towards our partners, in this case it is addressed primarily to the Europeans, and not to us, we will need to keep this in mind in the future,” noted Mr. n Putin.

According to the head of government, GM did not warn anyone and “explicitly confronted everyone with a fait accompli, despite all previously reached agreements and signed documents, including those of a legal nature.” Nevertheless, the prime minister emphasized, GM’s decision will not affect Russia’s plans in any way, “they will not undergo any changes.” “We will work with everyone, including American manufacturers - GM is represented in Russia, we will support their activities in Russia, just as we will maintain our contacts with European manufacturers,” he said. Among the latter, Mr. Putin named German and French manufacturers - everyone who came to the Russian market. “We have our own big plans, they will be implemented in any case - not within the framework of this scheme (purchase of Opel shares) - in other areas,” the prime minister said.

Last Tuesday, the GM board of directors unexpectedly decided not to sell a 55% stake in Opel to a consortium of the Canadian Magna and the Russian Sberbank. Directors took into account the improved forecasts for the auto market and the changing position of the American company itself. Almost immediately it became known that GM would now fire 10 thousand employees of Opel, of which the British brand Vauxhall is part.

In total, Opel's European structures, almost half of which are based in Germany, employ 54 thousand people. The reduction of 10 thousand jobs, in fact, is not much different from the plans announced by Magna. However, German trade unions, fearing the closure of two of Opel's four plants, already held protests yesterday.

In Rüsselsheim, where the main production of the autoforge is located, 10 thousand Opel workers came out to a protest rally. This, as the head of the Opel works council Klaus Franz told the audience, was only the beginning of the labor collective’s struggle against the planned dismissal of 9 thousand people and the closure of a number of enterprises. “We will stand together for our common future,” Mr. Franz called for new protests. - We will not allow ourselves to be defeated. We believe in ourselves because we are Opel." At the same time, he announced the conditions under which any further negotiations between representatives of Opel workers and GM management would be possible. First of all, Opel must be given the right to be registered as a “German joint stock company” in compliance with all the requirements necessary in such cases. In the future, the company should not remain, as Mr. Franz put it, “an appendage of GM.” In addition, a demand was put forward to conclude a tariff agreement to ensure the activities of the Opel International Development Center in Rüsselsheim. The third condition the chairman of the collective council called “the introduction of new forms of material support for workers.”

People in Rüsselsheim are reacting especially violently to the threat from across the ocean to send the German Opel on the path to bankruptcy. Indeed, after refusing to sell Opel, the American concern announced its intention to reorganize its subsidiary in Europe, Deutsche Welle reported. According to the head of the European division of GM, Karl Peter Forster, the American concern intends to take as a basis the rehabilitation plan developed by the Austrian-Canadian company Magna. The German government was going to allocate 4.5 billion euros for this plan. But, according to the head of the GM concern Fritz Henderson, the reorganization of the European enterprises Opel and Vauxhall will cost no more than 3 billion euros, although auditors estimated its cost at 4 billion euros. According to Mr. Henderson, GM intends to return to the restructuring plan developed at the end of 2008, which involves reducing overhead costs by 30%.

But Opel works council chief Mr Franz yesterday described the bankruptcy route as blackmail and intimidation. “Stop your bankruptcy talk,” he urged the parent company's management. “It only hurts our business.” Yesterday, according to some reports, the council of the enterprise staff was supposed to file a complaint with the European Commission in Brussels. It states that the turnaround plan presented by GM this year threatens the safety of a number of Opel enterprises in Belgium and Germany. If GM proceeds with this plan, relying on funding from government sources in the UK and Spain, we will be talking about a gross violation of the rules of competitive rivalry. If this happens, Mr Franz promised that Opel would raise the issue with EU Competition Commissioner Neeli Cruz.

Protests by Opel workers yesterday also took place at other production sites where the concern's factories are located. During the day, demonstrations covered Eisenach, Bochum and Kaiserslautern. In Bochum, the protesting Opel workers were supported by the Prime Minister of the federal state of North Rhine-Westphalia, Jürgen Rüttgers.

Leading independent experts in the automotive industry have so far tirelessly warned of serious risks for Opel if the German automaker continues to operate under the roof of GM. Ferdinand Dudenheffer, a professor at the University of Duisburg-Essen, considered an authoritative expert in the auto industry, argues that the Opel rescue plan presented from overseas, according to which “only” 10 thousand jobs should be cut, is essentially reminiscent of the Magna-Sberbank concept and only at first glance is “conciliatory”. Based on the experience of the last twenty years, the professor said in an interview with the Financial Times Deutschland, we can say that the risk of possible failure of attempts to revive Opel as part of GM is very high. "In my estimation, it's even too high to provide billions of dollars in taxpayer-funded loans," Mr. Dudenheffer said.

The expert bases his conclusion on the fact that for Opel the path to the “market of the future - Russia”, unlike Magna, will be virtually closed. “After GM has hammered the china in Russia, the opportunities there that could have been realized in the event of, as expected, cooperation between Opel, Magna and GAZ will be closed for the American concern. Thus, the volume of GM-Opel business will be significantly more modest,” the professor believes. He also worries that after GM goes bankrupt, it will be more difficult to obtain loans on good terms. "Against this backdrop, GM's turnaround efforts in Western Europe and North America will pose very high risks," Mr. Dudenheffer said. In his opinion, GM plans to use, in fact, a copy of the plan presented by Magna in order to obtain budget loans in Germany for $ 2 billion from taxpayers' money, as well as to achieve concessions on the amount of earnings of Opel workers.

One can only guess how events will develop. The German government has already demanded, after a meeting between Federal Chancellor Angela Merkel and the Chairman of the Opel Works Council, Mr. Franz, to develop an action plan to save 25 thousand jobs at four Opel factories in Germany. But first, according to German politicians, GM must return the funds already paid from the state loan provided by the German government to support Opel's activities. As GM President Fritz Henderson announced yesterday, GM will repay the bridge loan in the amount of 1.5 billion euros by the end of November. According to him, GM did not fully use the loan provided, and now its debt on it amounts to 900 million euros.

Sales of new cars in the United States in October turned out to be better than expected and amounted to 10.46 million on an annualized basis, according to research company Autodata, INTERFAX reports. This figure exceeded the average forecast of analysts - 10.2 million. In August, the market reached a peak of 14.1 million, which was due to the government subsidy program for buyers of new cars (cash for clunkers). It fell 23% in September as the program ended. General Motors, breaking a series of declines, increased sales by 4.7% compared to last year, Ford - by almost 3%. Toyota's figure remained virtually unchanged compared to October 2008, but the Korean Kia increased sales by 45%, Hyundai - by 49%. Chrysler again suffered losses, reaching 30%. However, according to the five-year plan for the “transformation” of the American automaker, presented yesterday by the CEO of the alliance formed after the merger of FIAT and Chrysler, Sergio Marchionne, Chrysler, which suffered bankruptcy, can return to profitability by 2011. According to him, more than half of the American manufacturer's cars, including the Jeep brand, will be produced on the FIAT platform. Chrysler also plans to cut costs by $2.9 billion over the next five years, and $23 billion will be spent on updating the model range in the near future, in particular, by 2010 it is planned to update three-quarters of the model range of American cars. According to alliance experts, the presented plan assumes that by 2014 the American manufacturer's sales volume will more than double - to 2.8 million cars.

Irina TSYRULEVA, Yuri ShPAKOV, Berlin