GM decides to keep Opel, U-turn sparks German backlash

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Frankfurt, Berlin: General Motors’ decision to keep its European arm Opel after months of negotiations to sell it triggered anger and dismay in Germany, which had led the talks and was putting up much of the cash.

Opel labour leader Klaus Franz rescinded the millions of euros in cost concessions workers agreed to on the expectation that Opel would be bought by Magna, the Canadian autoparts firm leading the bid that the German government had thrown its weight behind. German economy minister Rainer Bruederle called GM’s behavior “totally unacceptable,” while Christine Lieberknecht, the premier of Thuringia state, which hosts an Opel plant, called the decision a “low blow.”

German officials who asked not to be named said the decision came as a total surprise to Chancellor Angela Merkel and her advisers during a visit to Washington, where Merkel addressed a joint session of Congress.

One Opel worker showing up for an early-morning shift at the plant in Bochum, a factory seen at particular risk as GM swings the cost-cut axe, was in a bleak mood. “I don’t know what is going to happen here in Bochum if Magna does not take it over,” said the man who did not give his name.

GM chief executive Fritz Henderson told about the news to a German delegation during Merkel’s meeting in Washington with the heads of the World Bank and IMF, shortly before her return to Berlin. Senior German officials said the Opel issue did not come up when Merkel, who had lobbied hard for Magna and its Russian partner Sberbank to buy Opel as the best way to preserve German jobs, met US President Barack Obama on Tuesday.

Juergen Reinholz, economy minister of Thuringia, said GM had signaled it would pay back a euro 1.5 billion German bridging loan for Opel by the end of November. Opel put the best face on its parent’s change of heart. “The GM board of directors’ decision brings clarity for Opel/Vauxhall,” it said in a brief statement on Wednesday. “We will actively support all parties to implement this board decision as quickly as possible in order to safeguard a successful future for Opel.” GM abandoned a long-expected sale of Opel, saying improving business conditions and the strategic importance of Opel had prompted the move by its 13-member board of directors.