GM is putting a brave face on it, but its much-cherished request for Opel loan guarantees across its major European manufacturing bases is starting to become a little shaky.
The jungle drums are beating ever louder from London but particularly Berlin, where governments wrestling with appalling public deficits try to prise open the books to see where savings can be made.
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Nothing it seems, is immune, not even once firmly-held beliefs that support for the automotive industry is sacrosanct.
The beancounters are poring over the accounts, looking to see where projects can be trimmed or eliminated as Europe desperately seeks to stave off the terrifying prospect of economic contagion turning a recession into a depression.
Increasingly loud noises coming from the German capital appear to see the government adopting an ever-more sceptical stance towards GM’s request for EUR1.5bn (US$1.8bn) in loan guarantees.
Economics minister Reinhard Bruderle has consistently stalled concerning any aid decision, with apparently a meeting slated for today (4 June) to discuss the matter being put off again until next week, although as it is a public holiday in Germany it appears unlikely any meaningful discussions could actually take place.
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By GlobalDataGermany is being battered by vast swathes of its Eurozone partners to be the lynchpin behind the financial union, which is hampered by the simple fact it’s not a political union.
So, Mediterranean economies creaking at the edges of the Continent, notably Greece and Portugal, but also possibly Italy and Spain, adopt their own fiscal spending plans, while the man on the Cologne omnibus wonders why his prudent, careful husbandry leads to his wallet being constantly opened.
And there’s also a political dimension to this. German chancellor Angela Merkel has come under sustained criticism concerning the way she is handling the economic crisis and Opel asking for an enormous amount in financial guarantees could well be seen as coming way down the pecking order.
But given Germany’s position as the automotive powerhouse of Europe, there are literally tens of thousands of jobs at stake in both vehicle manufacturing and the supply chain.
The UK too recognises this and earmarked a smaller but nonetheless significant amount of EUR300m for GM’s Vauxhall division, although even this has now come under forensic scrutiny, with Britain’s new coalition government as equally strapped for cash as its German counterparts.
Where now? There’s a suggestion the German government thinks GM is becoming liquid enough to fund restructuring by itself and if the UK comes to a similar conclusion, those guarantees look increasingly fragile.
A guarantee is just that. It allows companies to borrow with the reassurance to lenders – who have not exactly been flashing the cash in the last two years – they will be repaid in the event of a default.
GM says it’s confident it will secure its wish list, but don’t bank on it.
