Europe - Economy

GM makes U turn in sale of Opel

Article published on the 2009-11-04 Latest update 2009-11-04 13:23 TU

Headquarters of German car manufacturer Opel in Ruesselsheim, 4 November 2009
(Photo: Reuters)

General Motors has decided against selling its majority stake in Opel to Canadian manufacturer Magna International and its Russian Partner Sberbank. The German government has slammed the decision and unions are planning to protest as they fear deep restructuring.

In a statement, GM’s board said it had “decided to retain Opel and initiate a restructuring of its European Operations in earnest.”

The company believes the solution to be the most cost effective. This has caused political and diplomatic controversy across Europe as the move to sell Opel Magna had been viewed as the best way of saving jobs in Germany in particular.

German Economy Minister Rainer Bruederle said the decision was "totally unacceptable". The German government, who had lobbied hard for the sale in order to save several thousand jobs, said it expected GM to repay the 1.5 billion-euro loan it had given the American company.

The Russian government has expressed surprise at GM’s decision to scrap the sale plans.

German unions are already planning nation wide protests this Thursday which they hope will spread Europe-wide.

 Armin Schild from the Frankfurt branch of IG Metall, Germany’s 2.3 million member union sais: “A company that needs 12 months to realise that its own subsidiary is capable of surviving  and six months to decide whether it should be married off has already disqualified itself from being a responsible employer. Our demands were and still are: No Plant closures, no lay-offs, a business plan that safeguards factories and a new corporate strategy.”

Close to half of GMs workforce are employed in Germany, 4,700 people work at Opel’s sister brand Vauxhall in Britain and others are based in Belgium Poland and Spain.