Killing Me Softly: The Slow Death Of Opel

Opels head shop steward Klaus Franz is mightily mad at Opel’s CEO Nick Reilly. Reilly told the London Times that the Ampera, Opel’s counterpart to the Volt, may be built in the Ellesmere Port plant in the UK:“The chances are quite good that the Ampera will come to Ellesmere Port as it is close in production terms to the Astra and will share many components,” Reilly said. In the meantime, Berlin cues Roberta Flack’s “Killing me softly” as a prelude for Opel’s funeral.

It’s a minefield out there, and Riley steps right in: According to the Times, “any commitment by Vauxhall to bring the Ampera to the UK will come with heavy caveats and pleas for further state subsidy. It has already received £270 million of loan guarantees from the Government to increase Astra production.”

Reilly is holding out for more money. For the Ampera to come to Britain, “the conditions must be favourable”, Mr Reilly said to the Times “If there is no incentivisation, you would be more likely to go where the incentives might be, like Spain or elsewhere.”

The Commissars in Brussels listen intently and are taking notes. They need every cent to save Greece and other Euro-threatening states. Reilly’s loose lips will save unnecessary expenses: State support in return for job guarantees are strictly verboten in the EU. The talk in the UK sounds as if someone tries to attract flak from the EU.

Franz noted that the Ampera had already “been promised to Premier Jürgen Rüttgers for Bochum.” Franz also complained that the Astra Sports Tourer, which was to be built in Opel’s main plant in Rüsselsheim, has been moved to Ellesmere Port. Franz reminds Reilly that the €300m of state aid from the U.K. is dependent on state aid from other countries, the most notable being Germany.

Today, it became clear that Germany won’t be spending any money anytime soon. The “Credit Guarantee Committee” (“Bürgschaftsausschuss”) of the German government convened today as planned. As previously leaked, the committee decided to decide nothing.

Most alarmingly (for Reilly,) the committee leaked today that there will be no decision before the election in North Rhine-Westphalia in early May, heard Das Autohaus. North Rhine-Westphalia is home to Opel’s Bochum plant, and with the elections gone, gone will be the last reason to spend any German tax payer money. We’ve said it before, we say it again: Everybody knows that Europe has overcapacity in cars. European car sales are back at carmageddon levels. With subsidies running out, it is a bloodbath in the making. Everybody knows it, nobody wants to be caught saying it: Any subsidized car that Opel sells is missing from the sales of other European car manufacturers, notably Volkswagen. Something, someone has to go. The most likely candidate? U.S. government owned, rattlesnake-killer led GM’s Opel.

Ho to get rid of Opel? Slowly. “I prayed that he would finish, but he just kept right on.”

Dow Jones Germany reports that the German government has many “open questions about the Opel restructuring plan. As long as these ambiguities are not eliminated, there will be no government aid from Germany.”

The ambiguities are the old standbys: Inflated license fees, the possibility that German government money will seep in the direction of Detroit, the lack of concessions from the Opel employees, and GM’s financial contribution. While they are at it, the German government is accusing GM of creative accounting: The bridge loan that was extended by the German government and paid back last November is listed as GM’s restructuring contribution.

In other words, the answer from Berlin is: Nein.

But nobody will give a clear “Nein” before the elections. Maybe not even after the elections. The German government simply has to play for time. Time is money. Eventually, Opel will run out of time and money and has to throw in the towel. Berlin would rather see GM give up. Driving someone to suicide is much more socially acceptable than outright murder.