The British government said yesterday it would work closely with General Motors (GM) after the US automaker scrapped an on-again, off-again plan to sell its big European division, Opel, that had triggered a political and diplomatic controversy.
The announcement on Tuesday stunned the global auto industry and provoked anger in Germany.
German Economy Minister Rainer Bruederle said that GM’s decision suddenly to abandon the deal with Canadian group Magna was “totally unacceptable.”
The announcement by dealt a blow to German Chancellor Angela Merkel as she visited Washington after she backed the sale to Magna as the best way to save German jobs, in tortuous negotiations shortly before a general election which she then won.
The German government was holding a Cabinet meeting yesterday and Merkel’s spokesman Ulrich Wilhelm made clear: “The German government regrets the decision.”
Heading into the Cabinet meeting, Bruederle said GM’s behavior was “totally unacceptable” and demanded to see details of GM’s restructuring plan.
Meanwhile, a spokesman for the British Department for Business said London wanted “to work closely with GM to understand their plan for the business and what it means for the UK,” noting the government “would be willing to provide funding” if the “right long-term sustainable solution is identified.”
The company said its board made the decision because of “an improving business environment for GM over the past few months, and the importance of Opel/Vauxhall to GM’s global strategy.”
Britain has 4,700 workers at Opel’s Vauxhall operations.
The GM board “has decided to retain Opel and will initiate a restructuring of its European operations in earnest,” GM said in a statement.
The announcement was the latest twist in a saga that has led to months of uncertainty for Opel after the struggling US auto giant underwent a government-backed bankruptcy reorganization.
The European unit, which was to be shed under the plan, turned into a major controversy as governments in Europe and the US clashed over which portions of the automaker would be saved and what types of aid would be offered.
GM said it now believes keeping Opel and restructuring the European division itself would be the most cost-effective solution, noting it would soon present its restructuring plan to Germany and other governments.
“From the outset, our goal has been to secure the best long-term solution for our customers, employees, suppliers and dealers, which is reflected in the decision reached today,” president and chief executive Fritz Henderson said.
“This was deemed to be the most stable and least costly approach for securing Opel/Vauxhall’s long-term future,” he said.
Germany hoped GM would “strengthen the performance of the Opel unit,” and “limit the inevitable adaptations to the bare minimum” — a euphemism for job cuts, Wilhelm said.
But Henderson said the restructuring costs had been estimated at US$4.4 billion, “significantly lower than all bids submitted as part of the investor solicitation.”
He vowed to work with European labor unions “to develop a plan for meaningful contributions to Opel’s restructuring.”
GM had given preliminary approval to plans to sell a 55 percent stake in German-based Opel to Canadian firm Magna and its Russian partner Sberbank.
Magna’s co-chief executive officer Siegfried Wolf, in a sober statement, said “we understand ... it was in GM’s best interests to retain Opel.”