No decision over German state aid to Opel, says economy minister

Article by Christian Andrei, on August 26, 2010

A meeting of state and federal officials will take place on Wednesday but Germany's Economy Minister Rainer Bruederle clarified that a decision about German state aid to General Motors Co.'s Opel unit will not be made here. Rather, only a debate is expected to occur at this meeting of the officials who are responsible for reviewing loan guarantee requests.

Bruederle reasoned that this is only an advisory body. It is believed that a decision on state aid will be made by senior members of the government in conjunction with states affected by Opel's restructuring.

For GM'srestructuring, it wants 1.8 billion euros from countries with Opel/Vauxhall plants in an effort to make the unit profitable by 2012. To date, UK has promised to provide 300 million euros.

But the bulk of the amount is expected from Germany where GM is seeking about 1 billion euros at this country where Opel and half of GM's European workforce are based.

In early March, GM said that it would give 1.9 billion euros ($2.6 billion) in equity and loans to Opel. This triples its funding and cuts its request for state aid in a proposal to win over European governments and labor.

Opel intends to terminate 8,300 jobs in factories across Europe, shut down a factory in Antwerp, Belgium and lower capacity by 20%.

Germany seems to not be enthusiastic about the concept of handing over taxpayer funds into Opel after GM opted to keep Opel rather than sell it to Magna International Inc. Germany politicians want guarantees that Opel aid won't be diverted to GM in the US. [via autonews - sub. required]

Topics: opel, germany

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