The German government has decided that the financial health of General Motors is in too good of a standing to require loans for the restructuring of Opel. Most recently, GM has payed back government loans from the U.S. and Canada and has even announced the company’s first quarterly profit in years. Such financial triumphs have caused many within the German government to question GM’s need for Opel loans.
In particular, Michael Fuchs, a senior member of Angela Merkel’s ruling CDU party, has been against Opel loans since the beginning. Initially, he pointed to The General’s U.S. finances and showed concern that European loans would support American operations. Now he appears to be concerned with the complete opposite – that GM’s U.S. division is profitable and that the European arm, therefore, does not need any loans. Whatever his reasons (read: excuses), he does not want to give Opel any money.
Opel, as well as its CEO Nick Reilly, is still waiting on word from the German government on the status of the €3 billion it requested for restructuring. It seems likely that GM will flex its muscle by showing Germany (and – consequently – Ms. Merkel and Mr. Fuchs) and other European countries how easy it is to make plants (and thousands of jobs) disappear. The tug of war has begun and it will be interesting to see how it plays out.[Source: Autoblog]