Blog: Dave LeggettDecision time

Dave Leggett | 24 August 2009

The continuing deadlock over GM's sale of Opel/Vauxhall places an unhelpful uncertainty over the company's future.

GM's board of directors, it would appear, favours the bid from investor group RHJ. That bid has emerged as one in which GM can likely have a greater say in Opel's future (whether or not there is actually a buy-back clause). The Magna bid, however, comes with concerns over technology transfer, not just to Magna, but to its ambitious Russian partners who want to build and sell Chevrolets in Russia.

Now then, GM as seller, you might think, ought to be free to choose a buyer. But it is a bit more complicated than that. Opel in Germany employs 25,000 directly – over half of GM Europe's total workforce – and is seen as very important to Germany's economy. The German government has already made bridging finance available to Opel's German operations and wants a big say in Opel's future.

The German government at all levels has swung solidly behind the Magna proposal which is perceived as more sympathetic to maintaining plants and jobs in Germany than RHJ's.

That means GM's board and the German government are not exactly seeing eye to eye. In essence, Germany wants Magna and GM now leans towards RHJ.

A federal election due next month has added to German political momentum behind the Magna plan. Pressure is being exerted at all levels and may well become difficult for GM to resist. German Chancellor Angela Merkel would probably like to present a more or less done deal to voters. If she does manage to do that, the devil may well be in the detail.

Whoever the new owner eventually is, restructuring is coming. How many jobs will go, on what timescale and exactly where may well be a fuzzy question to answer for a while yet. The bad news will be easier to deliver when that election is out of the way.

But will Opel/Vauxhall be in the right shape to be competitive? If not, protecting jobs now may well be jeopardising more in the future.

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