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 Merkel to Meet GM's Opel Managers Over Funding Plea (Update2) By Chris Reiter  Nov. 17 (Bloomberg) -- Chancellor Angela Merkel will hold crisis talks today with General Motors Corp.'s Opel on providing the German automaker with financial support, as pleas grow for European auto industry aid to match help proposed in the U.S. Opel has asked for 1 billion euros ($1.27 billion) in government credit guarantees. The state government in Hesse, where Opel employs 15,000 staff, agreed to make available loan guarantees of as much as 500 million euros to Opel and auto- parts suppliers based in the region. Lawmakers in the state, where another 50,000 people work for parts manufacturers, will vote on the step Nov. 19. ``This is not just about Opel, but all the automotive suppliers that have come into hardship,'' Hesse state Prime Minister Roland Koch said today in a statement. ``We have to be careful that German companies don't get sucked into the maelstrom of the crisis American companies are in.'' The meeting in Berlin comes as carmakers in Europe and the U.S. clamor for aid to help offset what GM has called the worst auto market since 1945. In the U.S., plans supported by President-elect Barack Obama are being drawn up to provide at least $25 billion in loans to GM, Ford Motor Co. and Chrysler LLC. European automakers are meanwhile lobbying the European Union for 40 billion euros in low-interest loans and incentives to scrap older cars. Job Factor European politicians have expressed concern that a failed carmaker could plunge the region's economy into disarray, threatening tens of thousands of jobs. Opel has about 25,700 of its nearly 56,000 European workers in Germany, according to the company's Web site. About 50,000 people are employed by auto- parts suppliers in Hesse alone, state figures show. French Finance Minister Christine Lagarde called today for national and European ``actions'' to support the auto industry. ``It's important that we have a good discussion on the right steps to take and that we try to support the auto industry,'' Merkel said in a statement issued Nov. 15. She has invited Opel Managing Director Hans Demant, GM Europe Chief Carl-Peter Forster, and Klaus Franz, Opel's top worker representative, for talks in Berlin. A press conference is scheduled for 5:45 p.m. Opel's overture comes after criticism from economists that the German government's package of stimulus measures agreed earlier this month isn't enough to help Europe's biggest economy climb out of recession. Merkel said Nov. 12 that the government will review if there is ``extra scope'' for additional steps to help the economy amid the worst recession in at least 12 years. `Doesn't Make Sense' Still, resistance to using taxpayers' money to bail out failing enterprises is strong. German Finance Minister Peer Steinbrueck told today's Bild newspaper that devising a general emergency plan for the auto industry ``doesn't make sense'' because the state can't make up for weak consumer purchasing power and isn't responsible for industry failings. European car sales plunged almost 15 percent in October, the region's sixth consecutive monthly decline. In the U.S., auto sales fell for the 12th straight month in October, extending the longest slide in 17 years. Opel is asking for German government assistance at the same time as its parent company seeks a U.S. government bailout to avert bankruptcy. GM will raise about $230 million after agreeing to sell its 3 percent stake in Suzuki Motor Corp. back to the Japanese carmaker. The German unit said Nov. 14 that it wants loan guarantees in case it is affected by the parent's crisis and if ``GM's financial situation were to intensify.'' State aid would cover development of vehicles and equipment for Opel's German factories and would ``under no circumstances'' be used outside Europe, it said. `Absolutely Essential' ``If GM goes bankrupt, the government guarantees would be absolutely essential for Opel,'' said Christoph Stuermer, a Frankfurt-based analyst with research firm Global Insight. ``The time for panic has not come, and to make sure that time doesn't come is why they're in Berlin today.'' GM shares traded in Germany rose 10 percent to the equivalent of $3.31 as of 12:18 p.m. in Frankfurt. The company's stock has plunged 88 percent this year in New York. State Help Sought Opel approached the federal government for help as well as the states of Hesse, North Rhine-Westphalia, Rhineland- Palatinate and Thuringia, where the carmaker has plants. Steinbrueck and Economy Minister Michael Glos are scheduled to hold talks about Opel with the states tomorrow. The federal government may shoulder 1 billion euros worth of loan guarantees and the four states another billion, Focus magazine said in a summary of a report published today. Opel isn't facing a liquidity problem, Klaus Franz, works council leader, said in a statement over the weekend. The guarantees would be a ``preventive measure'' in the event that GM's problems in the U.S. worsen, he said. Opel workers may have to accept lower wages in order to secure their jobs, Armin Schild, an official with the IG Metall labor union, said today in an interview with Deutschland Radio. Opel, which targets mainly low-income buyers, has been among the automakers hardest hit by the credit crunch. The brand's European sales have fallen 12 percent this year, more than twice the industry wide drop, according to the European Automobile Manufacturers' Association. In April, Detroit-based GM vowed to invest 9 billion euros in Opel through 2012 as part of an effort to introduce 20 models within four years. GM generated 20 percent of its $181 billion in 2007 sales in Europe, according to Bloomberg data. GM and fellow U.S. carmakers Ford Motor Co. and Chrysler LLC would receive $25 billion in loans out of a $700 billion bailout package approved earlier this year under legislation that Representative Barney Frank of Massachusetts and Senator Carl Levin of Michigan are writing. President George W. Bush's administration opposes using those funds for the auto companies. To contact the reporters on this story: Alan Crawford in Berlin on acrawford6n@bloomberg.net; Chris Reiter in Berlin at creiter2@bloomberg.net. Last Updated: November 17, 2008 08:24 EST |
