General Motors (GM) will have to spend at least twice the 3 billion euros (US$4.5 billion) it is budgeting to turn around its European unit Opel/Vauxhall, a union chief said.
“I think that a restructuring involving a progressive strategy will cost more than 6 billion, or nearer 7 billion euros,” Armin Schild, an IG-Metall official who sits on Opel’s supervisory board, told the weekly WirtschaftsWoche.
“I am wondering where the money will come from,” he said in an interview to be published in today’s edition of the magazine.
International ratings agency Moody’s has estimated the cost of the restructuring at 5 billion euros, a German press report said last Tuesday.
GM has named executive vice president Nick Reilly as interim head of the unit to “oversee the creation of a strategy to position Opel/Vauxhall for long-term success.”
The US giant had signed a preliminary deal in September to sell a majority stake in Opel, but changed its mind last month, embarrassing the German government and raising fears of sizeable job cuts.
The move also prompted the departure of Opel boss Carl-Peter Forster.
Berlin had strongly backed a sale to Canadian auto parts maker Magna International and state-owned Russian lender Sberbank, but roused suspicions that it was in return for lower job losses in German plants.
Other European countries where Opel has factories like the UK, home to Vauxhall, Spain and Poland feared they would bear the brunt of the sale.
The proposed deal also caught the attention of EU regulators, who were checking whether German aid was only offered to Magna, and not to other bidders, and therefore broke EU rules.
Berlin may finally cough up aid in any case, as GM asks European governments including Germany to provide part of the cash it needs to turn Opel around.
The weekly Spiegel said on Saturday that despite some argument within the new center-right coalition government, German Chancellor Angela Merkel and Finance Minister Wolfgang Schaueble were prepared in principle to assist GM.
However, union leader Schild expressed doubt that GM had executives competent to restructure Opel or would give them sufficient autonomy.
The Sunday paper Welt am Sonntag quoted “well-informed” sources as saying the Opel board would decide next month who will be the company’s new permanent chief.
It said there were two possible candidates to succeed Forster, without naming them.
Meanwhile, an Opel spokesman said GM would be moving its European headquarters from Zurich to Ruesselsheim, Opel’s base in Germany.
The spokesman gave no date for the move and no indication of how many jobs would be involved. GM subsidiary Chevrolet would still be run from the Swiss city, he said.
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