Blog: Dave LeggettGM 'clearing the air' over Opel

Dave Leggett | 29 July 2009

I was a bit surprised to receive a 'push' email from GM directing me to a blog posting on GM Europe's corporate blog. It just said in the body text: 'please note there is a new blogpost by John Smith, GM group vice president and GM's chief negotiator for the sale of Opel, on' Short and sweet. Okay, I thought, let's have a gander.

I guess the people at GM – especially in Europe – felt compelled to have something said to the outside (and inside) world, anything. So, what do we have. Well, it's decision time, folks. But GM is kind of stuck. Magna's bid has gone down well in Germany, but GM – the firm actually making the sale, remember – has problems with that bid (mainly connected with the bidder's Russia requests; the Russians want to get their mits on Chevrolets in Russia).

The RHJ International bid looks much more attractive to GM. RHJ is potentially a much more compliant partner and there may even be an opportunity to buy Opel back later on when the good times are rollin' again (tongue is slightly in my cheek, but GM tails are most certainly up post-Ch11).

But there is no decision, yet. There's something of an impasse in the negotiations that is taking up a lot of management time. And the world may as well know that directly, rather than get it from continual media leaks (and, if you look at how this story has been covered, pretty accurate ones - don't blame the messenger).

It could be that John Smith's blog is designed to do a number of things:

  • Simply clarify to all – not least people inside GM Europe as well as the media - why there has been no further announcement or news in the sale process;
  • Put pressure on Magna for concessions in the negotiations;
  • Put pressure on the German government to, in turn, put pressure on Magna or make representations to Russia's government;
  • Keep the RHJ International pot simmering away, their bid by no means dead - a message GM perhaps wants to send, in particular, to Germany.

I have seen these deadlocks in business before. It can go on forever when you have something that looks intractable and high-level officials go around in circles, getting stuck on the same point and the detail – which is indeed tricky to sort. The Big Wigs get briefed. The impasse continues unless there is a ticking time-bomb of some sort that focusses minds as deadlines near (there isn't in this case - I gather that GM Europe's financial position isn't critical now). It sometimes needs quite a mental leap to resolve things, on the part of one or both parties.

Isn't this the point at which Messrs Stronach and Henderson chew the fat over a game of golf? You never know, they might see a workable solution by the time they get to the 18th - or indeed, in the bar. Turn Chevrolet Russia into a JV of some sort?

John Smith's blog posting

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