Why GM Doesn’t Want To Give Up Opel

The one thing U.S. carmaker General Motors is still incapable of doing is building a car anyone wants. Bluffing at poker, on the other hand, is something GM is really good at. They have been keeping the Opel employees and the German government at bay for weeks now. The idea that GM’s Detroit management will now come to any decision regarding Opel’s future is by no means certain.

Why won’t GM give Opel up? GM needs the European carmaker in Rüsselsheim because that is where all the future technology is developed and held.

GM cars are deadwood in the automobile market, accounting only for financial losses. The “Cash for Clunkers” program recently showed this since Ford and the Asian carmakers were the ones who profited from that program while GM and Chrysler lost out.

Now, it is not as if GM stands to lose all Opel’s technical know-how if, for example, the Canadian-Austrian parts manufacturer Magna were to take Opel over. GM would remain the major stockholder in the company with 35 percent of the stock. GM’s management in Detroit was more than willing to go this route when the corporation was standing on the edge of bankruptcy.

Now GM does not want to hear that old story and is engaging in irresponsible delay tactics and promoting fears that remind one of the Cold War days. One scare tactic maintains that know-how could be exported to Russia if Magna, which has financial connections to the Russian Sberbank, gets its hands on Opel.

First of all, this can be contractually controlled in that the planned company will be under Magna’s strategic direction, not Russia’s. Besides that, the Russians would scarcely be in a position to build their own automobile industry overnight using stolen technology.

Besides that, GM presently is dealing with the Chinese on several different potential business deals. GM’s board of directors apparently has little fear that the Chinese might get access to technological know-how from any of those, despite the fact that it is precisely the Chinese who are well known for plagiarizing technologies left and right.

General Motors is obviously looking for a back door that will allow them to keep control of Opel in its entirety and maintain its say in the company’s management. But that is going to be expensive because GM first has to pay back 1.5 billion euros in assistance loans to the German government.

Deeply indebted GM does not have that kind of money, and neither does it have the billions for Opel’s necessary future investments. Sooner or later, that which was averted a few weeks ago by the infusion of government assistance will again threaten.

In order to keep its own head above water, General Motors will then dismember Opel and auction off the pieces to the highest bidders. The Eisenach factory might go to Volkswagen who already has an eye on such a scenario. Rüsselsheim’s operations might be moved to Detroit or perhaps still be sold to Fiat. The factories in Antwerp, Ellesmere Port, Gleiwitz and Zaragoza would simply be closed down.

It is a dismal scenario. Unless GM finally takes intelligent action and responsibility for tens of thousands of jobs, Opel’s workers will take to the barricades. It is a wonder they have been so quietly patient all this time.