Merkel waiting for 'thank-you letter' from General Motors

25th November 2009, Comments 0 comments

Earlier this month, Merkel said that Opel would have been finished without Berlin's loans.

Berlin -- German Chancellor Angela Merkel said Tuesday she was expecting a "comprehensive thank-you letter" from General Motors for huge loans to keep the auto maker's Opel unit afloat, which she said had now been repaid.

"I can tell you that the last funds (received by) General Motors have been paid back, which means that the Opel operation has not cost the German taxpayer a cent," Merkel said in a speech in Berlin.

She added with a smile that she expected "a comprehensive thank-you letter from General Motors in a few years," a comment that prompted cheers from the crowd of business leaders she was addressing.

And she defended her decision to offer the 1.5-billion-euro (2.2-billion-dollar) loan to the Detroit-based car giant, saying: "It was absolutely right ... to build a bridge."

Earlier this month, Merkel said that Opel would have been finished without Berlin's loans. "Without our involvement there would be no Opel today," Merkel told the Frankfurter Allgemeine (FAZ) daily.

"We secured Opel's chances of survival."

The loan had been due to be repaid by November 30.

GM agreed in September to sell a majority stake in Opel, which includes Vauxhall in Britain, to Canadian auto parts maker Magna International and Russian state-owned lender Sberbank.

But it later pulled a handbrake turn on the deal, deciding instead to keep the loss-making unit and restructure it itself, with the potential loss of thousands of jobs across Europe.

It has not yet said where the jobs will be cut and which plants will be closed, leaving GM's 50,000 employees across Europe fearing for their jobs.

The u-turn infuriated Germany and Merkel, who had invested a lot of capital, both political and financial, in the deal with Magna-Sberbank.

Germany had offered a total of 4.5 billion euros' worth of state aid for the deal, including the 1.5-billion-euro loan and three billion euros in state loan guarantees.

The news was all the more embarrassing for Merkel as it broke during her recent official visit to the United States.

However, in a boost for Merkel and German Opel employees, GM Europe's interim head Nick Reilly said earlier Tuesday the firm expected to keep open its plants in Bochum and Kaiserslautern in western Germany.

The Bochum plant, employing almost 5,200 people near Essen will remain "an important location in the future," Reilly said after talks with the premier of the German state of North Rhine-Westphalia where the site is located.

Astra and Zafira cars are assembled at Bochum, which also makes axles and gearboxes, according to Opel's website.

It is one of four Opel plants in Germany, employing between them around 25,000 people.

Reilly later added that Kaiserslautern, where a further 3,300 people are employed, "will play an important part in the future of Opel."

The GM boss also said that GM would on Wednesday present its concrete plans for the unit, which are expected to result in a 20 to 25 percent cut in production capacity and the loss of between 9,000 and 9,500 jobs.

GM is seeking roughly 3.3 billion euros in financing from European governments.

A GM spokesman said the plan would be discussed with union representatives and relevant governments before it was made public.

German magazine Spiegel said the company had received offers of 400 million euros from Britain and between 300 and 400 million euros from Spain, as well as proposed tax breaks from Poland.

Following a meeting of top finance ministry officials and GM executives in Brussels on Monday, the European Commission said that nations affected had decided not to make formal commitments before a further meeting on December 4.


0 Comments To This Article