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'New Opel', new worries

Relief in Europe that General Motors has found a buyer for Opel turned on Friday to worries about job cuts and plant closures, and over whether "New Opel" can survive.

autos Updated: Sep 11, 2009 17:56 IST

Relief in Europe that General Motors has found a buyer for Opel turned on Friday to worries about job cuts and plant closures, and over whether "New Opel" can survive.

Further concerns focused on the involvement of the Russian government in the loss-making new firm, and over whether the deal may yet fall apart over what GM has called "several key issues" still to be dealt with.

Under the deal unveiled on Thursday, GM has agreed to sell a 55-per cent stake in Opel to Canadian auto parts maker Magna and to state-owned Russian lender Sberbank. GM will retain 35 per cent and employees the rest.

The agreement covers all GM's European operations except Swedish unit Saab which is likely to be bought by a Swedish company with support from Chinese interests.

The breakthrough was seen as a coup for Germany, where the government under Chancellor Angela Merkel had pressed hard for GM to choose Magna and Sberbank, offering 4.5 billion euros in financial sweeteners.

Half of Opel's 50,000 employees work in Germany, and in a boost for Merkel's chances of winning a second term in elections on September 27, Opel's new owners have pledged to keep open its four main plants in the country.

"I am exceptionally happy about this decision, which is along the lines of what the government wanted," a visibly relieved Merkel said in Berlin on Thursday, as she rushed to unveil the news even before GM.

But with Magna expected to cut 10,000 jobs, elsewhere in Europe there were worries about where Opel's new owners would make the major cuts that analysts say are crucial for long-term survival.

Opel has about 7,000 employees in Spain, 4,700 at Vauxhall in Britain, 5,500 in Belgium, 1,800 in Italy, 1,600 in Austria and 1,500 in France, according to GM Europe's website.

GM vice-president John Smith said in Berlin on Thursday that Opel's new owners were "contemplating" winding down a plant at Antwerp, Belgium, and shifting some production from Spain to Germany.

Unions in Belgium expressed hope that a decision to close Antwerp had not yet been taken, and the head of the Flemish government called on the European Commission to probe Germany's state aid.

In Britain, Vauxhall workers were worried, with one saying: "I'm absolutely devastated, for the simple reason it doesn't secure the long-term future for this place. The morale is low."

Merkel's government also has tricky talks ahead with other European governments over contributions to Germany's state aid package.

It is also far from certain that Magna and Sberbank will be able to carve out a place for "New Opel" in a still struggling global auto industry where in Europe and North America too many cars are being made for too few customers.

"The winner today could be the loser tomorrow," analyst Juergen Pieper from Metzler Bank told AFP. "Everyone knows there is enormous over capacity in the market ... and Opel is by far the weakest player in Europe today."

"Magna cannot be a big help in industrial terms," he said. "They haven't constructed any cars of their own, they don't have volume they don't have anything to combine Opel's products with, they cannot deliver special expertise."

German mass circulation daily Bild was also sceptical: "Who is going to pay? The German taxpayer ... Germany is carrying all the risk. Opel is not rescued yet by a long shot."

"German politicians may breathe a sigh of relief ... Voters should be more worried. They will pay a high price -- fiscally, economically and politically -- for short-term peace of mind," the Financial Times said.

Newspapers also raised concerns about the Kremlin's involvement, with Germany's Frankfurter Allgemeine saying that "no one knows what the Russians are really planning, what extra demands they will have."

Magna and Sberbank want Russian carmaker GAZ, owned by billionaire oligarch Oleg Deripaska, to use its plant in the city of Nizhny Novgorod to make Opels for the depressed Russian market.

Belgian media were also unimpressed, with La Libre Belgique crying simply: "Merkel wins!"