Sun, Mar 01, 2009 - Page 11 News List

Opel to cut its 80-year link with GM

RESTRUCTURING Opel is planning to detach itself from its parent, General Motors, and reorganize as a joint-stock firm to lure investors and state backing to avoid insolvency

THE GUARDIAN , LONDON

Troubled German carmaker Opel is in effect to become independent from its parent company General Motors (GM) after 80 years, under restructuring plans announced by its supervisory board.

The move will also see Vauxhall, which represents GM in the UK, rolled into the newly restructured company and spun off from its US parent. GM employs about 5,000 people in the UK.

Hans Dechant, the head of Adam Opel GmbH, said that the carmaker would “largely detach” itself from GM and reorganize as a joint-stock company to lure investors and state backing to save it from insolvency.

Carl-Peter Forster, head of the GM Europe division, said Opel needed an injection of 3.3 billion euros (US$4.2 billion) from ­governments across Europe to make the plan work. Speaking at a press conference at Opel’s headquarters in Russelsheim, in Frankfurt, Forster said GM would give up a stake of between 25 percent and 30 percent.

Forster said that Opel would become “significantly more independent” as a self-standing European company, but would retain close links with GM.

Opel said it wanted to retain access to new technologies and to benefit from a relationship with a large company. Certain legal and business links would remain.

The future of all 10 General Motors plants in Europe are all under review.

At least two plants are likely to be closed soon because of overcapacity and to cut losses.

The announcement to restructure General Motors European operations came after protests by thousands of workers in several cities this week who called for Opel to split from GM, in an effort to save it from insolvency and protect their jobs. Opel employs 26,000 in Germany alone.

Detroit-based GM has already received US$13.4 billion in state aid and is looking for a further US$16.6 billion. It has announced it lost US$30.9 billion last year, including US$2.8 billion at its European units.

Opel said it was hoping the German state would guarantee 3.3 billion euros in loans necessary for the restructuring plan, making it the first carmaker in Europe to ask for government support. But the government has repeatedly struck a note of caution, calling on Opel to first come up with a workable restructuring package.

Forster said the restructuring plans would be presented to the government on Monday as well as four states in which Opel has plants. Experts warned of complications likely to arise around the issue of patents and rights. Forster said “considerable savings” of 1 billion euros needed to be made, and cuts in wages and voluntary redundancies were to be expected.

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