Corp.’s German subsidiary Adam Opel GmbH soon will submit a plea for government assistance as part of its attempt to break free from its struggling parent company.
Opel plans to ask for €3.3 billion ($4.2 billion) from Germany and other European governments, as well as €3 billion ($3.8 billion) from GM, while also looking to cut its own structural costs by €1.2 billion ($1.5 billion), GM Europe says in a statement. GM is working with representatives of the German government to move the funding process forward.
Opel’s effort to separate from its struggling parent company comes on the heels of a demonstration by a reported 15,000 Opel workers at the auto maker’s sprawling Russelsheim manufacturing campus, which also serves as Opel’s headquarters.
Workers fear plant closures and massive job losses if Opel remains closely linked to GM, which desperately needs to cut costs and draw down production during a recession that has gone global. The U.S. auto maker announced Thursday a $9.6 billion fourth-quarter loss and full-year $30.9 billion shortfall in 2008.
“The discussion with governments is being driven by the exceptionally weak economic situation that has seriously eroded consumer demand for vehicles and shut out the availability of credit for financing operations,” GM Europe President Carl-Peter Forster says in the statement.
Forster, who also serves as chairman of Opel’s supervisory board, says the auto maker is moving to restructure its business with as minimal an impact on jobs as possible. “But the reality is that we’re in an exceptional economic situation and the issue of plant closings must be considered.
“We will work with our labor representatives to find the best way forward in mitigating the societal impact of the restructuring, but it should be made clear that we need all three parts of the plan to be viable – the structural cost reductions, government support and GM support. Anything short of this will not result in a viable operation.”
The structural-cost reduction likely will include concessions from Opel’s 25,000 employees in the region, many of whom are represented by the strong IG Metall union, which is leading the effort to break away from GM.
GM acquired Opel in 1929, roughly 66 years after it was founded by Adam Opel. The unit has become closely intertwined with GM’s North American operation as the U.S. auto maker moved to a global product-development process in recent years.
As such, GM Europe says it “remains open to discussions on partnerships, equity positions or other alignments that will strengthen the relative position of Opel/GM,” but indicates the German unit will remain an integral part of the parent company.
GM reported Feb. 26 its European unit lost $1.89 billion before taxes in fourth-quarter 2008, compared with a loss of $445 million in the prior-year. Revenue fell to $6.4 billion from $10.7 billion, due mostly, the auto maker says, to lower industry volume across the region and an unfavorable model mix.