European countries cautious on Opel’s bid for state aid

Article by Christian Andrei, on August 26, 2010

The responses of European countries to Opel's request for 2.7 billion euros ($3.7 billion) in loans or loan guarantees to help it cut nearly 8,400 of its 48,000 workforce and reduce capacity by a fifth have been mostly cautious. From Germany, Opel is asking for 1.5 billion euros in state aid to fund 4,000 job cuts in its home country.

From Spain, the UK, Austria and Poland, the company is asking for another 1.2 billion euros. German Economy Minister Rainer Bruederle said that he will "carefully examine" the documents.

Bruederle, a member of the free-market liberals in Germany, has been vocal at calling for General Motors Co. to fund Opel's operations itself, and not just to contribute 600 million euros toward the 3.3 billion euros it says it needs for restructuring.

In Frankfurt, Opel Nick CEO Reilly told reporters he doesn't anticipate being turned down. Opel expects that altogether, it will book restructuring charges of about 1 billion euros for reducing 8,370 workers across Europe.

This figure is inclusive of about 1,300 white-collar jobs but excludes an additional 1,500 in cuts via early retirement plans.

Spain's Industry Minister said that it considers planned job cuts of 900 at the Figueruelas plant in Zaragoza to be a sacrifice. He said that Spain's position with regard to the restructuring plan has yet to be decided.

In a news conference, Miguel Sebastian said that there's a need to sit down with the unions and the local Aragon government to assess the proposal.

The meeting is also intended to find out all the details, particularly its long-term viability. Last Tuesday, Opel announced a five-year plan to bring the company into profit by 2012.

Opel revealed that the 11 billion euro plan needs 3.3 billion euros to operate the company during the restructuring. Opel will work with European governments to secure 2.7 billion euros in loans or loan guarantees. [via autonews - sub. required]

Topics: opel, europe

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