GM exec expects Germany to contribute Opel aid
Sunday, December 6, 2009
FRANKFURT (Reuters) – General Motors will not cut more jobs at Opel in Germany if the German government refuses to give state aid although the U.S. carmaker said it remains confident Berlin will soften its current stance.
"I am very optimistic that all our countries will come forward with some sort of assistance," the new head of GM Europe, Nick Reilly, said on Saturday.
Speaking to reporters during a conference call, Reilly said a refusal by Berlin was more hypothetical than anything, but even in this unlikely case it would not mean the 25,000 German staff at Opel would suffer as a result.
"It won't make any difference to our restructuring plan, so it will not lead to more layoffs in Germany or less layoffs," he explained.
Germany's liberal economics minister, Rainer Bruederle of the pro-market Free Democrats, reaffirmed on Friday his belief GM had enough resources to fund Opel's turnaround itself.
GM had cash and securities worth $42.6 billion at the end of September thanks to a bailout by the U.S. government.
"There is some belief that because GM now has some liquidity in the U.S. that any of that money can come and sort out our problems in Europe," Reilly said, but he explained GM has only "some flexibility" to use U.S. taxpayer money.
The remainder is needed to fund GM until it is profitable in the U.S. market in 2011, to pay back U.S. government loans and to fund "significant" cash spending in the current quarter for restructuring its U.S. operations and pay for a Delphi settlement of $2.8 billion.
"Yesterday at the EU meeting I was able to address that question to his (Bruederle's) representatives and we are looking forward to our next meeting with them, which will probably be next week," Reilly said.
ANTWERP'S CHANCES SLIM
Reilly said a presentation made to European officials in Brussels on Friday detailing his plans for the future of Opel was well received, but he could not say when the decision for financial aid will be made.
"Our requirements are about 3.3 billion euros ($5 billion) in total. Some of that is for restructuring, only maybe around 1 billion for that," he explained, adding the rest would be used to keep investing in the business next year when Opel will remain in the red.
He did not foresee any difficulties with EU competition authorities blocking government support even though aid from countries like the UK, Spain and Poland will be used to reduce headcount mainly in Belgium and Germany.
"We are working closely with the EU competition commission to make sure that any application for aid is not going to have a problem," he said.
Reilly said GM Chairman Ed Whitacre, who has taken over as chief executive after sacking Fritz Henderson this week, had not told him to deepen or accelerate the restructuring of Opel. Nevertheless he warned that plant capacity, not just people, would need to be taken out of Opel somewhere in a clear warning that Antwerp's future was in considerable danger.
"I would anticipate (a decision) before the end of the year or right at the beginning of next year," Reilly said.
He acknowledged GM had signed a document that foresaw building two small SUVs in Antwerp, but said plans had since changed and any attempt to legally enforce the contract would be "very, very detrimental to the company."
(Additional reporting by Peter Dinkloh; Editing by Matthew Jones)
source;reuters.com
"I am very optimistic that all our countries will come forward with some sort of assistance," the new head of GM Europe, Nick Reilly, said on Saturday.
Speaking to reporters during a conference call, Reilly said a refusal by Berlin was more hypothetical than anything, but even in this unlikely case it would not mean the 25,000 German staff at Opel would suffer as a result.
"It won't make any difference to our restructuring plan, so it will not lead to more layoffs in Germany or less layoffs," he explained.
GM had cash and securities worth $42.6 billion at the end of September thanks to a bailout by the U.S. government.
"There is some belief that because GM now has some liquidity in the U.S. that any of that money can come and sort out our problems in Europe," Reilly said, but he explained GM has only "some flexibility" to use U.S. taxpayer money.
The remainder is needed to fund GM until it is profitable in the U.S. market in 2011, to pay back U.S. government loans and to fund "significant" cash spending in the current quarter for restructuring its U.S. operations and pay for a Delphi settlement of $2.8 billion.
"Yesterday at the EU meeting I was able to address that question to his (Bruederle's) representatives and we are looking forward to our next meeting with them, which will probably be next week," Reilly said.
ANTWERP'S CHANCES SLIM
Reilly said a presentation made to European officials in Brussels on Friday detailing his plans for the future of Opel was well received, but he could not say when the decision for financial aid will be made.
"Our requirements are about 3.3 billion euros ($5 billion) in total. Some of that is for restructuring, only maybe around 1 billion for that," he explained, adding the rest would be used to keep investing in the business next year when Opel will remain in the red.
He did not foresee any difficulties with EU competition authorities blocking government support even though aid from countries like the UK, Spain and Poland will be used to reduce headcount mainly in Belgium and Germany.
"We are working closely with the EU competition commission to make sure that any application for aid is not going to have a problem," he said.
Reilly said GM Chairman Ed Whitacre, who has taken over as chief executive after sacking Fritz Henderson this week, had not told him to deepen or accelerate the restructuring of Opel. Nevertheless he warned that plant capacity, not just people, would need to be taken out of Opel somewhere in a clear warning that Antwerp's future was in considerable danger.
"I would anticipate (a decision) before the end of the year or right at the beginning of next year," Reilly said.
He acknowledged GM had signed a document that foresaw building two small SUVs in Antwerp, but said plans had since changed and any attempt to legally enforce the contract would be "very, very detrimental to the company."
(Additional reporting by Peter Dinkloh; Editing by Matthew Jones)
source;reuters.com
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