Opel asks European govts for $3.7 billion in loans
FRANKFURT:GM's Opel unit asked European governments for billions of euros (dollars) in aid on Tuesday even as it formally presented a restructuring plan that will result in some 8,300 job cuts in Europe.
Opel, owned by General Motors Co., is seeking loans and loan guarantees to the tune of euro2.7 billion ($3.7 billion) as it invests euro11 billion in Opel through 2014 and have the company break even by 2011.
Chef Executive Nick Reilly declined to say how much was being sought from individual countries.
"We don't anticipate we will be turned down," he said. "Our estimate is the overall process will take several weeks until it is completed, but we expect to have sufficient liquidity during this period."
German Economy Minister Rainer Bruederle said GM is seeking loan guarantees covering euro1.5 billion from the German federal and state governments, and he was noncommittal about the answer.
"We will carefully evaluate the documents we now have," he said, noting that European countries previously agreed that the European Commission should conduct a preliminary evaluation into Opel's request.
Parent General Motors has already injected euro600 million (nearly $825 million), along with euro650 million in advanced payments, to ensure Opel's cash positions.
Reilly did not elaborate on how far talks with governments have gone. Discussions with Britain, Spain and Austria among others have elicited "a reasonably good response," he said.
Asked at a news conference why Opel couldn't bank on more money from GM, which emerged from bankruptcy last year with government help, Reilly said that money is earmarked to pay back U.S. and Canadian government loans and invest in future technology.
Reilly noted that GM's cash resources are "essentially U.S. taxpayers' money."
"It is not surprising that the U.S. would expect Europe and European governments to help a European entity, and not have the U.S. taxpayer for all of the restructuring and growth of Opel," he added.
Germany's IG Metall industrial union said it couldn't support the restructuring plan as it stands and recommended that officials reject GM's aid request. It called on the company to back off closing the plant in Antwerp, Belgium.
The governor of Germany's Hesse state, which is home to Opel's Ruesselsheim headquarters, made clear that he wants to see more money from Detroit.
"According to our first assessment, it will be necessary that GM as the owner significantly increase its share in the restructuring and realignment," Roland Koch was quoted as saying by the German news agency DAPD.
The figure for job losses was in line with that previously given. Opel and British sister brand Vauxhall employ around 48,000 people in Europe, about half of them in Germany.
"We are confident that we have a plan for the future that will work and deliver results," Reilly said, adding the company hopes to break even by 2011 and "make a decent profit in 2012."
The job cuts will include 1,300 sales and administration positions along with cuts at most of the automaker's manufacturing plants in Europe, Opel said.
It reiterated that it plans to close the Antwerp plant and let go 2,377 workers there. Production of the Astra HB3 will be transferred to a plant in Bochum, Germany.
Elsewhere, the company will cut 1,799 jobs in Bochum; 900 positions in Zaragoza, Spain; 892 in Ruesselsheim; 300 at Eisenach, Germany; 369 in Luton, England; and 300 in Kaiserslautern, Germany.
However, the plants in Gliwice, Poland and Ellesmere Port, England, are set to escape any cuts.
Last November, GM abruptly canceled the planned sale of a majority in Opel to a consortium led by Canadian auto parts maker Magna International Inc., instead deciding to restructure the brands itself.
Reilly suggested GM was offering a better deal than Magna and requesting less aid, and also noted that GM paid back with interest a euro1.5 billion bridge loan that Germany provided to keep Opel afloat while a buyer was sought.
Opel board member Reinald Hoben said, independently of the restructuring program, some 2,000 people in Germany had previously signed up for early retirement programs will be leaving through 2012 and 2013.
The 8,300 figure includes about 500 of those employees, Hoben said. Of the remaining 1,500, about 650 will replaced will be replaced by new hires to ensure that "critical skills" are maintained, he added.
Reilly said the automaker would focus on three areas: making quality, desirable cars; developing alternative propulsion and expanding into growth markets in the Middle East and Asia.
"Several studies are underway to look at export programs," Reilly said, "but I want to be clear: we are only going to expand in those areas where it is economically viable."