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German minister in US Opel talks Wagoner open to proposals on Opel
(about 4 hours later)
Germany's economy minister will meet the US treasury secretary later on Tuesday to discuss a government bail-out of General Motors' subsidiary Opel. GM boss Rick Wagoner has said the firm is willing to take "a less than 100%" stake in its Opel offshoot, in order to get German aid to save the subsidiary.
Germany's economy minister is in the US to discuss a government bail-out of European subsidiary Opel.
But Berlin wants to be sure no state support would find its way back to Detroit and be used to bail out GM.
"We're open to a different structure in Europe," said Wagoner. "We need more cost savings."
Wagoner met with the German Economy Minister Karl-Theodor zu Guttenberg on Monday night in Washington. Guttenberg said it was essential for GM to find a private investor.
Germany's economy minister was meeting the US treasury secretary on Tuesday to discuss a government bail-out of General Motors' subsidiary Opel.
Karl-Theodor zu Guttenberg will discuss with Timothy Geithner GM Europe's 3.3bn euros (£3.1bn; $4.3bn) request for aid.Karl-Theodor zu Guttenberg will discuss with Timothy Geithner GM Europe's 3.3bn euros (£3.1bn; $4.3bn) request for aid.
GM has already received $13.4bn from the US government, and has requested another $16.6bn, but this money will not go to its European operations.GM has already received $13.4bn from the US government, and has requested another $16.6bn, but this money will not go to its European operations.
There are concerns that without state aid, GM Europe could go bust.There are concerns that without state aid, GM Europe could go bust.
Detailed proposalsDetailed proposals
Mr Guttenberg met GM officials on Monday night.Mr Guttenberg met GM officials on Monday night.
He was seeking assurances that any monies contributed by the German government would not be used to prop up Opel's US parent.He was seeking assurances that any monies contributed by the German government would not be used to prop up Opel's US parent.
Instead, he wants to ensure that any state funding will be used to secure Opel's long term future.Instead, he wants to ensure that any state funding will be used to secure Opel's long term future.
Any decision about a bail-out will depend on the detailed proposals for its European operations being put together by GM.Any decision about a bail-out will depend on the detailed proposals for its European operations being put together by GM.
The reality is that without a cash injection from GM or European governments, Opel and Vauxhall will be forced to close down Professor Baback Yazdani, Nottingham Business SchoolThe reality is that without a cash injection from GM or European governments, Opel and Vauxhall will be forced to close down Professor Baback Yazdani, Nottingham Business School
Germany has already demonstrated its willingness to help its ailing car industry by introducing a 2,500 euros cash incentive for car owners who trade in old cars.Germany has already demonstrated its willingness to help its ailing car industry by introducing a 2,500 euros cash incentive for car owners who trade in old cars.
The UK government is also waiting to see GM Europe's proposals before it makes any decision about contributing to a bail-out of GM's UK-based Vauxhall subsidiary.The UK government is also waiting to see GM Europe's proposals before it makes any decision about contributing to a bail-out of GM's UK-based Vauxhall subsidiary.
"We need to see what the plans are before making any decision," said a spokesperson for the Department of Business, Enterprise and Regulatory Reform."We need to see what the plans are before making any decision," said a spokesperson for the Department of Business, Enterprise and Regulatory Reform.
The proposals should be completed "in the short term" said a spokesperson for GM Europe.The proposals should be completed "in the short term" said a spokesperson for GM Europe.
Imminent collapseImminent collapse
Earlier this month, GM's top executive warned that the European division of General Motors, which comprises Opel, Saab and Vauxhall, could collapse within weeks without European governments' help.Earlier this month, GM's top executive warned that the European division of General Motors, which comprises Opel, Saab and Vauxhall, could collapse within weeks without European governments' help.
This, he said, could cost up to 300,000 jobs.This, he said, could cost up to 300,000 jobs.
GM posted a loss of $30.9bn in 2008 and is haemorrhaging money at a worrying rate.GM posted a loss of $30.9bn in 2008 and is haemorrhaging money at a worrying rate.
It has already announced plans to cut 47,000 jobs and close five more US factories, with about 26,000 of the cuts taking place outside the US.It has already announced plans to cut 47,000 jobs and close five more US factories, with about 26,000 of the cuts taking place outside the US.
Bail-outBail-out
GM Europe has, therefore, asked European governments for 3.3bn euros to help it survive the dramatic slump in sales it is experiencing during the global economic downturn.GM Europe has, therefore, asked European governments for 3.3bn euros to help it survive the dramatic slump in sales it is experiencing during the global economic downturn.
Initial responses were frosty - earlier this month the German interior minister Wolfgang Schaeuble even declared that Opel should consider insolvency.Initial responses were frosty - earlier this month the German interior minister Wolfgang Schaeuble even declared that Opel should consider insolvency.
GM has already said that it wants to sell SaabGM has already said that it wants to sell Saab
Last week, EU ministers met to discuss the plight of GM Europe, amidst a growing concern that there are few options left open to them.Last week, EU ministers met to discuss the plight of GM Europe, amidst a growing concern that there are few options left open to them.
"The reality is that without a cash injection from GM or European governments, Opel and Vauxhall will be forced to close down," said Professor Baback Yazdani, Dean of the Nottingham Business School."The reality is that without a cash injection from GM or European governments, Opel and Vauxhall will be forced to close down," said Professor Baback Yazdani, Dean of the Nottingham Business School.
GM is running out of cash, and will do everything it can to protect its US interests."GM is running out of cash, and will do everything it can to protect its US interests."
The prognosis for its European arm, therefore, depends largely on European government funding.The prognosis for its European arm, therefore, depends largely on European government funding.
Sell-offSell-off
Ultimately, GM is trying to divest itself of its European arm, said Professor Yazdani.Ultimately, GM is trying to divest itself of its European arm, said Professor Yazdani.
"GM is following the example of Ford, which sold Aston Martin and Jaguar Land Rover to generate cash in a strategy that has paid off. It has not, for example, taken any money from the US government," he explained."GM is following the example of Ford, which sold Aston Martin and Jaguar Land Rover to generate cash in a strategy that has paid off. It has not, for example, taken any money from the US government," he explained.
GM has already said that it wants to sell Saab, its other high-profile European brand.GM has already said that it wants to sell Saab, its other high-profile European brand.
The company was placed into administration after the Swedish government refused GM's pleas for money.The company was placed into administration after the Swedish government refused GM's pleas for money.
The Swedish industry minister Maud Olofsson simply said it was up to the US carmaker to save Saab.The Swedish industry minister Maud Olofsson simply said it was up to the US carmaker to save Saab.
If GM Europe were to close down, "it would trigger failures in the supply chain," said Professor Yazdani.If GM Europe were to close down, "it would trigger failures in the supply chain," said Professor Yazdani.
"Under normal market conditions, this would not be a disaster for the industry. But at the moment, it certainly would be," he added."Under normal market conditions, this would not be a disaster for the industry. But at the moment, it certainly would be," he added.