German unions turn up heat on Berlin for Opel aid

2nd June 2010, Comments 0 comments

German unions turned up the heat Wednesday on Chancellor Angela Merkel's weakened government, pressing for financial aid for General Motors' unit Opel that Berlin is proving reluctant to give.

The head of Opel's works council, Klaus Franz, warned that US auto giant General Motors could close two of its four Opel plants in Germany if Berlin refuses to provide the state aid it was asked for months ago.

"If it is rejected, General Motors could restructure on its own terms -- we would then have to fear the closure of at least two Opel German factories," Franz, head of the Opel works council, said in a statement.

Opel, which includes Vauxhall in Britain, employs around 25,000 people -- half its European total -- at four plants in Germany.

The German union IG Metall called a demonstration for Monday in front of the Frankfurt stock exchange to press politicians "to finally assume their responsibilities" and grant loan guarantees so Opel can obtain financing at reasonable rates.

The unions and GM reached agreement on the terms of Opel's restructuring last month.

Merkel is poised to make a decision on the public aid component by the end of next week, following recommendations by experts.

However, she has been weakened by the resignation of two high-profile officials, including German president Horst Koehler, and tension with eurozone partners over expensive rescue packages for Greece and other countries.

An Opel spokesman told AFP the company was confident of obtaining loan guarantees from Berlin and "currently has no other plan" than one submitted to European governments that foresees 8,000 job cuts from a total of 50,000.

German approval is crucial since the federal and state governments have been asked to come up with more than half of the total requested aid.

The troubled automaker has asked European governments for 1.8 billion euros (2.2 billion dollars) in loan guarantees to underpin financing for a broad Opel restructuring programme, including one billion euros from Germany.

But Berlin has given the request a cool reception with Economy Minister Rainer Bruederle reiterating Tuesday that he was "very sceptical."

German officials feel that GM, which emerged from bankruptcy and posted its first quarterly profit in three years in the first three months of the year, can provide the financing itself.

Franz of the Opel works council stressed, however, that the US government, which controls GM, "is not ready to pay for European jobs and make US taxpayer money available for a restructuring of Opel."

Germany was ready last year to provide guarantees to Opel if GM sold it to Canadian auto parts maker Magna and Russian lender Sberbank but GM scrapped the deal in October.

The Opel spokesman told AFP it "already had a commitment on help from the British government and positive signs in Spain," where other plants are located.

But a spokesman for the British trade ministry told AFP that all spending agreed for this year "will be reviewed" by officials following a change of government in May.

Former trade minister Peter Mandelson agreed in March to provide up to 270 million pounds (300 million euros, 370 million dollars) in loan guarantees.

Opel was also pursuing talks in Poland and Austria, the spokesman said.

© 2010 AFP

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