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November 5, 2009

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Home » Business » Auto

No-sale decision sparks walkouts

WORKERS at auto maker Opel planned walkouts to protest General Motor Co's decision not to sell the European subsidiary, while Germany's government vowed yesterday to recover 1.5 billion euros (US$2.2 billion) it loaned GM to finance the sale.

Klaus Franz, Adam Opel GmbH's top employee representative, said workers would start brief work stoppages today.

GM decided late Tuesday to pull out of the deal with Magna International Inc and Russian bank Sberbank. It was an abrupt end to months of negotiations that saw the German government agree to provide 4.5 billion euros in financial aid for the deal, reached in September.

German labor and government officials strongly favored the sale as the option most likely to save German jobs.

Economy Minister Rainer Bruederle said the government would now seek to recover the bridge financing the government gave Opel last year to keep it afloat until Canadian auto parts maker Magna and Sberbank could take a 55 percent stake.

"We will get the taxpayers' money back," he said yesterday.

GM Europe spokesman Karin Kirchner said the company is prepared to repay the 1.5 billion euro bridge loan from the German government. "If we're asked, GM will repay the bridge loan in question," Kirchner said.

Industrial union IG Metall said workers at Opel's four German plants would halt work today, followed by similar moves tomorrow at other Opel locations in Europe. Opel has more than 25,000 workers in Germany.

GM Europe, which employs around 50,000 workers, also markets brands including Cadillac and Chevrolet in Europe. It produces the Vauxhall brand in Britain.

"I expect (GM) to lay its restructuring plans on the table as quickly as possible," said Bruederle, who took over the post of economy minister last month, after Chancellor Angela Merkel's re-election.

GM Chief Executive Fritz Henderson said the decision by the company's board was the result of an overall improvement in Europe's business environment and GM's health since it put the division up for sale late last year.

GM once favored a rival bid by investment firm RHJ International, in part for fear that Magna and Sberbank could create competition for Chevrolet in Russia, a key market for the auto maker.

Earlier this year, GM's new, post-bankruptcy board had ordered the management to consider more options, including keeping Opel, in part over worries that the company could lose control of shared GM-Opel technology and patents to competitors.

Opel, in its own brief statement yesterday, said GM's decision showed that the Opel and Vauxhall units play an important role in the global GM family, "a position that GM doesn't want to give up."

GM's announcement came the same day that Merkel spoke to a joint session of the United States Congress and after she had departed for Germany.

Henderson said GM will work with Europe's unions "to develop a plan for meaningful contributions to Opel's restructuring."

GM will first have to face indignation from German labor leaders. "We won't help shape the way back to General Motors," said Franz, the head of Opel's works council.

"Instead, we'll take up our classic function of defending the workers," he said without elaborating.


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