AVANTI R5
11-04-2009, 03:01 AM
DETROIT — The new board of General Motors (http://topics.nytimes.com/top/news/business/companies/general_motors_corporation/index.html?inline=nyt-org) reversed course Tuesday on the planned sale of its Opel (http://topics.nytimes.com/top/news/business/companies/opel_adam_gmbh/index.html?inline=nyt-org) division in Europe and decided that G.M. would retain and reorganize the business itself.
The decision was a blow to the Canadian auto supplier Magna, which was poised to acquire a 55 percent stake in Opel with the backing of the German government and labor unions.
G.M. put Opel up for sale in the spring as it headed toward bankruptcy in the United States, and G.M. management had selected Magna as the preferred bidder.
But at a board meeting Tuesday in Detroit, G.M. directors decided that the automaker would be better off keeping the European unit because it was a critical part of its global vehicle development strategy.
G.M.’s chief executive, Fritz Henderson (http://topics.nytimes.com/top/reference/timestopics/people/h/frederick_a_henderson/index.html?inline=nyt-per), said that the company would present a revamping plan to European governments soon, which would probably include plant closings and job cuts.
The company said it expected to spend 3 billion euros, or $4.4 billion, to downsize operations, which it said was “significantly lower” than what Magna and other bidders had projected.
“This was deemed to be the most stable and least costly approach for securing Opel/Vauxhaull’s long-term future,” Mr. Henderson said in a statement.
The decision to keep Opel is another example of the aggressive approach of G.M.’s board, a majority of which was selected by the Obama administration.
The board said an “improving business environment for G.M.” and the importance of Opel to G.M.’s global product plans prompted the decision.
Germany’s chancellor, Angela Merkel (http://topics.nytimes.com/top/reference/timestopics/people/m/angela_merkel/index.html?inline=nyt-per), had pushed for the sale to Magna and its Russian partner, Sberbank.
Magna, which is among the world’s largest auto-parts makers, had pledged to preserve jobs, notably in Germany where Opel has its largest concentration of factories and workers.
But the European Union (http://topics.nytimes.com/top/reference/timestopics/organizations/e/european_union/index.html?inline=nyt-org) raised concerns that a German government’s commitment to provide about $6 billion in aid to Opel might have prompted G.M. to select Magna.
German officials responded that the loans to Opel would have been available to other bidders or possibly even G.M. itself.
That opened the door for the G.M. board to reconsider the decision to sell Opel.
Mr. Henderson said G.M. felt that Opel was too integral to its overall operations. Opel is the source of G.M.’s small cars and fuel-efficient (http://topics.nytimes.com/top/reference/timestopics/subjects/f/fuel_efficiency/index.html?inline=nyt-classifier) engine technology.
“We understand the complexity and length of this issue has been draining for all involved” Mr. Henderson said in a statement. “However, from the outset our goal has been to secure the best long-term solution for our customers, employees, suppliers and dealers, which is reflected in the decision reached today.”
In a written statement, Magna’s co-chief executive, Siegfried Wolf, said: “We understand that the board concluded that it was in G.M.’s best interests to retain Opel, which plays an important role within G.M.’s global organization.” He pledged to “continue to support Opel and G.M. in the challenges ahead.”
Whether Germany and other European governments will aid G.M. in its plans is uncertain. German labor and government officials have been critical of G.M.’s management of Opel.
Mr. Henderson said G.M. would work with its labor unions to make “meaningful contributions” to fixing Opel. He also said that the division was not in immediate danger of running out of money, but would require a significant investment soon.
“While Opel continues to outperform against its viability plan assumptions and immediate liquidity is stable, time is of the essence,” he said.
Industry analysts had expressed concern that much of G.M.’s efforts to broaden its small-car lineup would be undercut by the sale of Opel.
The loss of Opel would also have left G.M.’s Chevrolet brand as its sole presence in the European market.
While Magna had pledged to work with G.M. on current product programs, there were no long-term guarantees on sharing engineering, technology and vehicle platforms.
By keeping Opel, the G.M. board underscored a growing sense inside the automaker that it was on a rapid road to recovery after its 40-day tour through bankruptcy this summer.
G.M. has not released any detailed financial information since it emerged from Chapter 11 on July 10 with the federal government as a 60 percent owner. The company is scheduled to release a third-quarter report in mid-November.
http://www.nytimes.com/2009/11/04/business/global/04gm.html?_r=1&partner=rss&emc=rss
The decision was a blow to the Canadian auto supplier Magna, which was poised to acquire a 55 percent stake in Opel with the backing of the German government and labor unions.
G.M. put Opel up for sale in the spring as it headed toward bankruptcy in the United States, and G.M. management had selected Magna as the preferred bidder.
But at a board meeting Tuesday in Detroit, G.M. directors decided that the automaker would be better off keeping the European unit because it was a critical part of its global vehicle development strategy.
G.M.’s chief executive, Fritz Henderson (http://topics.nytimes.com/top/reference/timestopics/people/h/frederick_a_henderson/index.html?inline=nyt-per), said that the company would present a revamping plan to European governments soon, which would probably include plant closings and job cuts.
The company said it expected to spend 3 billion euros, or $4.4 billion, to downsize operations, which it said was “significantly lower” than what Magna and other bidders had projected.
“This was deemed to be the most stable and least costly approach for securing Opel/Vauxhaull’s long-term future,” Mr. Henderson said in a statement.
The decision to keep Opel is another example of the aggressive approach of G.M.’s board, a majority of which was selected by the Obama administration.
The board said an “improving business environment for G.M.” and the importance of Opel to G.M.’s global product plans prompted the decision.
Germany’s chancellor, Angela Merkel (http://topics.nytimes.com/top/reference/timestopics/people/m/angela_merkel/index.html?inline=nyt-per), had pushed for the sale to Magna and its Russian partner, Sberbank.
Magna, which is among the world’s largest auto-parts makers, had pledged to preserve jobs, notably in Germany where Opel has its largest concentration of factories and workers.
But the European Union (http://topics.nytimes.com/top/reference/timestopics/organizations/e/european_union/index.html?inline=nyt-org) raised concerns that a German government’s commitment to provide about $6 billion in aid to Opel might have prompted G.M. to select Magna.
German officials responded that the loans to Opel would have been available to other bidders or possibly even G.M. itself.
That opened the door for the G.M. board to reconsider the decision to sell Opel.
Mr. Henderson said G.M. felt that Opel was too integral to its overall operations. Opel is the source of G.M.’s small cars and fuel-efficient (http://topics.nytimes.com/top/reference/timestopics/subjects/f/fuel_efficiency/index.html?inline=nyt-classifier) engine technology.
“We understand the complexity and length of this issue has been draining for all involved” Mr. Henderson said in a statement. “However, from the outset our goal has been to secure the best long-term solution for our customers, employees, suppliers and dealers, which is reflected in the decision reached today.”
In a written statement, Magna’s co-chief executive, Siegfried Wolf, said: “We understand that the board concluded that it was in G.M.’s best interests to retain Opel, which plays an important role within G.M.’s global organization.” He pledged to “continue to support Opel and G.M. in the challenges ahead.”
Whether Germany and other European governments will aid G.M. in its plans is uncertain. German labor and government officials have been critical of G.M.’s management of Opel.
Mr. Henderson said G.M. would work with its labor unions to make “meaningful contributions” to fixing Opel. He also said that the division was not in immediate danger of running out of money, but would require a significant investment soon.
“While Opel continues to outperform against its viability plan assumptions and immediate liquidity is stable, time is of the essence,” he said.
Industry analysts had expressed concern that much of G.M.’s efforts to broaden its small-car lineup would be undercut by the sale of Opel.
The loss of Opel would also have left G.M.’s Chevrolet brand as its sole presence in the European market.
While Magna had pledged to work with G.M. on current product programs, there were no long-term guarantees on sharing engineering, technology and vehicle platforms.
By keeping Opel, the G.M. board underscored a growing sense inside the automaker that it was on a rapid road to recovery after its 40-day tour through bankruptcy this summer.
G.M. has not released any detailed financial information since it emerged from Chapter 11 on July 10 with the federal government as a 60 percent owner. The company is scheduled to release a third-quarter report in mid-November.
http://www.nytimes.com/2009/11/04/business/global/04gm.html?_r=1&partner=rss&emc=rss