GM last week gave Opel another €650 million (~$930 million) in cash to keep it afloat.
The Adam Opel GmbH Supervisory Board today formally appointed GM Europe President Nick Reilly as CEO responsible for all Opel/Vauxhall activities worldwide, a post he assumed back in November.
Hans Demant, is no longer Managing Director of Adam Opel GmbH and GM Europe Vice President, Engineering. Instead he becomes Vice President, Global Intellectual Property Rights.
The latest moves follow a filing with the U.S. Security and Exchange Commission that revealed GM last week had given Opel another €650 million (~$930 million) in cash by prepaying its loss-making subsidiary for upcoming engineering services.
Critics claim that the only reason GM has the cash for such a transfer of funds is because U.S. and Canadian taxpayers have given it $50 billion. They also note that the European Union central government is vehemently against bailouts of automakers, although it readily pumped billions into banks and other financial institutions last year.
The money GM transferred — wherever it came from — is needed to keep Opel afloat while GM continues its quest for European government financing to restructure Opel/Vauxhall. GM has previously said that it will take as much as $4.8 billion to reorganize Opel. European state governments are considering requests for help at a pace that is best described as leisurely.
GM repaid a bridge loan from the German Government of €600 million ($860 million) after GM’s Board refused to go forward with the sale of Opel to Magna and Sberbank back in November. The German Central Government, regional government and the German Metalworkers union all had strongly supported the sale as a way to preserve German jobs.
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GM is continuing talks with European governments about receiving €2.7 billion in subsidies to finance Opel’s restructuring. As part of the reorganization, GM is considering eliminating 8,300 jobs and closing a plant in Antwerp, Belgium. Opel is also negotiating with unions on securing €265 million in annual savings from workers.
“To be sustainable, we must reduce capacity,” Reilly said about Opel back in November, which continues to be a loss on GM’s balance sheet after GM spent billions to fix it during the last decade. Speculation has it that half of the Opel/Vauxhall workforce needs to be sacked, but it is – thus far — politically impossible.
In Reilly’s still emerging revised plan, Opel/Vauxhall needs €3.3 billion in total capital — $5 billion — of which €1 billion is for restructuring. The rest will be for investments in new products. Reilly expects to lose money in 2010, so government financing is needed, although when it will be forthcoming is unknown.
One thing is certain. Opel product gaps need to be filled. Opel needs a mini, Reilly’s top priority. Although GM’s Asian expansion with SAIC announced last year, and prepared under Reilly when he headed Asia, provides it with a source for such vehicles — sure to be a combustible topic with European unions.
He also said the company would continue making light commercial vehicles. Initially, the Opel Ampera twin of the Chevrolet Volt will be imported from the U.S. The Ellesmere Port plant is one of the candidates for eventual local production, but there are others and that is years off and volumes to this observer appear scant.
With his appointment as CEO of Opel/Vauxhall, Nick Reilly retired from the Opel Supervisory Board. In addition, Prof. Dr.-Ing. Uwe Loos, Günter Michels and Bernd Pierburg also retired from the Supervisory Board. New members of this body, representing GM, are:
- Stephen Girsky, Senior Advisor to GM Chairman & CEO Ed Whitacre, and member of the GM Board of Directors
- Michael P. Millikin, GM Vice President & General Counsel
- Bill Parfitt, Chairman, GM United Kingdom Ltd.
- Karl-Friedrich Stracke, GM Vice President Global Engineering
Stracke appears to have the ability and background to help with cutting a deal with the reluctant German governments.
Reilly says that a restructuring could go forward without German financial support.