Opel’s bid for state aid from Germany gets rejected

On Wednesday, Germany had denied GM’s request for aid from the federal government in order to keep its Opel unit going. The German government, which had recently announced a plan to cut public spending in order to shrink the deficit, had said that GM had enough funds to pull themselves through.

Chancellor Angela Merkel however, has said that “the last word on the future of Opel naturally has not been spoken.”, and signified that would seek the assistance of various governors whose states host Opel sites. The original request for aid was made to a committee that examines such requests and manages a fund designated for such a purpose, but that committee was unable to reach a decision. German Economy Minister Rainer Bruederle then made his decision, saying “I am optimistic that the future of the subsidiary (Opel) can function without government aid,”

Opel CEO Nick Reilly is hoping that Merkel can secure between 25% and 50% of the originally rejected sum. Merkel has sworn that she will do what she can to help the workers who have committed themselves to the preservation of the company.

Thus far, many of the state governments have demonstrated their support for Opel’s application.

Opel sits in the center of a political situation for GM that is murky at best; much of Germany felt slighted by GM’s backing out of last year’s planned sale to a consortium of companies, and GM’s last resort would be to use U.S. taxpayer funds to restructure its European operations. The latter would be akin to social suicide with regard to the company’s American relations.

– By: Stephen Calogera

Source: Automotive News (Subscription Required)