Today’s (16 June) decision by Opel to turn to its parent for a substantial cheque of up to EUR1.8bn (US$2.2bn) will more than ruffle feathers Stateside .
The US is already feeling particularly sensitive about European companies, in particular BP (although the ‘British’ element was quietly dropped some while back) and is now facing a bailout of Opel through its majority ownership of GM.
GM’s European division’s obvious frustration with the German government in dragging its heels to provide it with the major chunk of the EUR1.8bn in loan guarantees, has seen it turn across the Atlantic for help.
But as Opel boss Nick Reilly pointed out today, the US taxpayer still has a 61% stake in GM and every cent spent is pored over by hawks in the Treasury.
And as Reilly noted, GM’s board has to report to the US Treasury, so today’s decision must have been approved at the highest level – although perhaps through the most gritted of teeth.
“One very important part of GM is its European operations,” the Opel CEO said. “If Europe is successful, it makes GM more successful and solid.”
Brave words but how the US – and for that matter – the German – administrations must have wished that last year’s putative Magna deal had gone through – saving all concerned a not inconsiderable amount of bureaucratic wrangling.
And now last November’s decision to keep Opel has landed GM with a bill it certainly didn’t expect at the turn of the year.
But nor could it could have foreseen the economic storm that would engulf Europe and make fragile access to liquidity ever more problematic.
Toss in a volatile domestic political environment in Germany with its coalition partners vehemently disagreeing on guarantees to Opel and it probably became obvious to GM some time ago it would have to start writing some cheques itself.
How this will play with the US electorate is unclear – it is still very early days and in the great scheme of things EUR1.8bn from a company turning in some decent performances – from the American side at least – may not be that cataclysmic.
But the very idea of the hard-pressed US taxpayer bailing out European companies – even if that is not exactly the case – will not sit well at all with the electorate.