Germany seeks to patch up growing divisions over Opel deal

BERLIN (Reuters) – Germany’s Economy Minister sought to shore up support for his government’s rescue plans for Opel amid signs of growing opposition at home and abroad to the Berlin-brokered deal with Canadian automotive firm Magna .

“I will be talking to my Spanish (counterpart) this afternoon,” Economy Minister Karl-Theodor zu Guttenberg told reporters in Berlin. “We will continue to co-operate closely on this just as we have in the last few months.”

Guttenberg’s remarks come after Spain and Britain both voiced opposition to Magna’s plan to buy 55 percent of Opel from General Motors.

Domestic headwinds for the deal are also growing, with the market-liberal Free Democrats (FDP) — in talks to form a new government with Chancellor Angela Merkel’s conservatives — raising concerns about it.

The Spanish government said Spain’s Industry Minister Miguel Sebastian would not attend a meeting called by Germany on Friday to discuss Opel because it was unhappy about Magna’s bid.

However, Sebastian is expected to attend a meeting with Magna’s chief executive Siegfried Wolf, his ministry said.

Separately, Business Secretary Peter Mandelson said he would not back the Magna deal in its current form.

SLICING UP THE FUNDING PIE

In order to push through the deal, Germany offered to stump up 4.5 billion euros (4.2 billion pounds) in guarantees for Opel, saying it would agree later on how this sum was split between countries with plants — which include Poland and Belgium as well as Britain and Spain.

Around half of Opel’s 50,000 European jobs are in Germany.

Magna and its Russian partner Sberbank have vowed to inject 500 million euros into Opel, which they want to use to make an aggressive push into the Russian market.

They plan to cut around 10,000 European jobs, a quarter of those in Germany, but have committed to keeping all the German plants running. Opel’s Antwerp plant in Belgium and UK manufacturing sites of sister brand Vauxhall are seen to be at risk.

Spain has told Germany it cannot support Magna’s current plans for the carmaker, according to German media reports, and doubts within Germany have resurfaced.

Deputy FDP leader Rainer Bruederle criticised the plans on Friday, and said he wanted to bring up the matter with conservatives in negotiations over the incoming coalition.

“My fears are gradually being realised that nothing has been properly worked out on this,” he told reporters.

Spain has voiced its discontent but has said it would back a solution that guaranteed the future of Opel’s Zaragoza plant.

UK questions Magna plans for GM’s Opel, report says

LONDON (Reuters) — Britain has questioned the viability of Magna International Inc.’s plan to buy General Motors Co.’s European arm, Opel, in a letter to European competition chief Neelie Kroes, the Financial Times reported on Thursday.
In the letter, obtained by the Financial Times, British Business Secretary Peter Mandelson says the Canadian company’s restructuring plan would be open to political intervention, too expensive and punitive of productive plants.

“We do not believe the case has been demonstrated that the current Magna proposal is commercially the most viable plan,” the FT quoted Mandelson as saying in the letter, which it says was sent to Kroes on Tuesday.

The European Commission issued a statement on Wednesday reiterating that it would examine whether Germany had tied 4.5 billion euros ($6.7 billion) in promised state aid to the preservation of Opel plants there.

Canadian automotive supplier Magna and Russian partner Sberbank have agreed to buy a majority stake in Opel, the main European arm of GM, and are in talks to work out the final details.

They plan to cut about 10,500 jobs from an Opel work force of 50,000 across Europe.

Britain is concerned the German aid could lead to more job losses for British workers at the two plants in England.

“Capacity at highly efficient plants in Britain and Spain is planned to be under-utilized, in favor of higher utilization of some of GM’s other less-efficient plants,” Mandelson said in his letter, according to the business daily. He also urged the Commission to “ensure a commercially based outcome rather than one determined by political intervention and subsidies.”