Stalling motor industry begs Europe for aid

Published on Saturday 21 February 2009 12:47

EUROPEAN governments are under intense pressure this weekend to map out a rescue plan for the embattled automotive industry amid concerns that Opel and Vauxhall could be the next General Motors plants to fall.

Thousands of jobs are on the line across Europe as analysts warn that several high-profile brands are in imminent danger of collapse.

All eyes will turn to Opel and Vauxhall this week after Saab, General Motors' Swedish brand, was placed into "reorganisation" on Friday.

The move will allow Saab to be relaunched as an independent company but motor industry experts warn that neither the Swedish government nor GM is willing to provide enough loans or subsidies for it to survive independently.

Opel will this week submit an urgent restructuring plan to the German government but board members have already warned that it will need at least ?3.3bn (3bn) to remain liquid.

German chancellor Angela Merkel has so far refused to commit to any formal rescue plan, saying the German government would not make any decisions until Opel has produced a viable recovery strategy.

Speaking at a news conference with Jos Manuel Barroso, president of the European Commission, on Thursday, Merkel said that even after plans have been submitted it would be up to each individual German state to decide how it wants to help the embattled brand.

"Opel must present a concept to secure its future and when we have that concept, we will discuss it," she said.

"It must be a decision for every state to decide on aid – yes or no, and in what form."

However, it is thought the swelling General Motors crisis and events at Saab over the weekend could force the German government's hand.

In the UK, rumours are intensifying over the future of Vauxhall, also a GM brand, after the Unite trade union warned last week that an unspecified UK car plant employing 100,000 is in immediate danger of collapse.

Although the union has so far refused to specify which company is involved, the threat has been linked by some with Vauxhall's plant at Ellesmere Port. Car unions are seeking an emergency

summit with Chancellor Alistair Darling this week to hammer out a rescue plan for the UK car industry after figures showed car production plunged 58.7% in January compared with the previous year.

Unite is pressing for a 13bn strategic assistance package. Speaking yesterday, Unite joint leader Tony Woodley said: "We need money, we need support and we need the plans the Government has actually got to come into action now."

The cloud over General Motors is spreading worldwide as the Canadian subsidiary of GM also went cap in hand to the Canadian government for $6bn Canadian (3.3bn) on Friday.

GM Canada has also submitted a restructuring proposal to the government.

In Korea, GM's Daewoo brand is also seeking an undisclosed rescue package from the state-run Korea Development Bank.

On Tuesday, the American parent company submitted a survival plan to the US Government in which it warned that it would need $16.6bn (11.6bn) to secure its long-term future.

GM chairman Rick Wagoner is looking to offload a number of its brands as part of the reorganisation, in particular Hummer and Saturn, and concentrate on the likes of Chevrolet, Cadillac and Buick.

In Europe, the company is looking to make savings of $1.2bn (837m). It has set a deadline of March 31 to decide the future of its European brands.

"A sustainable strategy for GM Europe could very well include partnerships with the German government or other European governments," GM chief operating officer Fritz Henderson said last week.