GENERAL MOTORS has warned that unless it gets urgently needed state aid for its European operations, primarily Opel, its operations in Europe may become unviable, with a potential 300,000 job losses.
GM estimates it could run out of money as early as next month, with the future of its operations in Europe being decided before the end of the year.
GM is seeking state aid from the German and British governments, among others, and estimates it needs €3.3 billion to keep its European business afloat. It has asked the German government for funding in exchange for a stake in a new semi-autonomous European division, of which Opel would be the largest element.
However, there is opposition within the German government to a handout and GM executives admit it has yet to convince them that it has a good case.
Speaking at the Geneva motor show yesterday, Fritz Henderson, chief operating officer of GM, told The Irish Times that the firm must answer two major questions about the future before there’s any chance of assistance: can GM repay any loans it receives and is GM Europe a viable business?
“The best thing about 2008 is that it’s over,” Henderson said.
GM will respond to the German concerns within weeks, but before that, restructuring will begin in earnest. Carl-Peter Foster, GM’s European chief, said there is 30 per cent excess capacity in the company’s European operation right now, a situation that must be addressed.
The closure of plants seems inevitable, though GM is aware of the political bad blood that goes with such action and it’s highly likely that any rescue plan from the German government would stipulate that plants remain open. Foster hinted at possibly selling that extra capacity to another manufacturer.
To some, the abolition of the UK-only Vauxhall brand seems logical, but both Foster and Henderson vehemently denied such a move was being considered, citing Vauxhall’s success as important to the company, and the British Ellesmere Port plant as an efficient operation.
Even if the German government or the EU comes to GM’s rescue, there will need to be widespread restructuring, resulting in some job losses and reduced wages, according to Henderson – a “shared sacrifice” everyone in the chain will have to endure, no matter what the outcome of the company’s plea to the German government.