As stated in the last item, Adam Opel's CEO has the unenviable position of having to metaphorically juggle the many balls of a growing number of corporate, financial and political stakeholders.
The recent episode of the dealer-base offering to prop-up the flailing GM division could well have been concocted behind closed doors between Opel seniors & the dependent dealers as a way of trying to force the Government's hand, recognising that the complexities and 'payback' of such an arrangement could only have worked with a complicit 'tax-payer backed' agreement from the the CDU (Christlich Demokratishe Union Deutschlands).
Angela Merkel, holding her ground, was having none of it, recognising the publicised initiative as simply a ruse within today's environment of 'Realpolitik'. But that and similar moves have played to the CDU's left-leaning co-alition partners – the SPD (Sozialdemokratishe Partei Deutschlands) - who given their prevalent socialist ideology are using such external efforts to leverage their own cause for re-election.
Given that the industrial heartlands of Germany are feeling economic pain, the mass populous Ruhr and Breman areas already SPD core areas are unfortunately (but understandably) becoming more and more persuaded the the party line of “social justice” - even if the debate regards the national budget accounting projections for such works are conveniently side-lined.
Part of that potentially ballooning budget deficit and GDP ratio is the issue of Adam Opel GmbH. With Lower Saxony's recently defended (19.9%) ' VW Law' re-setting a precedent, the Northern, Western & NorthWestern populous of comfortably-off factory workers, office staff and sections of management – the people who's prosperity soared thanks to fiscal conservatism and German productive efficiency – are waiting with baited breath for a similar deal for Opel.
This flawed “VW solution” has been prompted by apparent calls to do so from the SPD in the Bundestag chamber accompanied by the Labour Minister's (Olaf Scholz's) pronouncement in last weekend's national newspaper (Die) Bild – its tabloid content wrapped in a broadsheet format an unfortunate powerful conveyor of social influence.
The unsurprising retort from the CDU's Volker Kauder was that it would set a precedent for 'cross-the-board' sector and company bail-outs and must be resisted. Instead of the anti-market notions of Opel's partial (or even full) nationalisation, he repeated the line that Germany would be willing to provide state guarantees to Opel but it must first present a convincing turnaround plan. Whether that argument is real or yet another example of a tactic in 'Realpolitik' remains to be seen, given that GM HQ is pointedly seeking $4.5bn / €3.3bn in loan guarantees from European states, Germany financially the most heavily exposed given the size of Opel's innate car producing capacity and the associated 29,000 jobs.
Merkel's fractious relationship with her French peer Sarkozy has done nothing to assist her cause in recent weeks as he seeks to placate his public by having Renault re-shuffle / swap its production builds of Clio & Twingo between E.European and France; and by doing so thereby straining relations with Brussels given the 'spirit' of conditional EU financing.
Beyond the outward politics, the real problem emerging, as GM seeks to relinquish its stake in Adam Opel GmbH, is who would be willing to invest in the company? The government's distancing itself is understandable, probably less a result of business case dissuasion than it conveys and more a case of recognising that it would not be in the best interests of the public purse or ongoing economic transformation. But discounting one obvious candidate does not reveal an obvious other.
Unless a virtual protectorate of the state (France, Italy), the very basic tenants of traditional car-making have forced the industry to lower cost regions; the consequences of failing to do so now ever so evident in Detroit and across North America.
However, 'on paper' Opel could have a brighter future in a very different mould if it is given a level of free reign by GMHQ. Opel is a major contingent of GMNA's survival since it plays the role of medium car design developer (to S. Korea's GMDAT's small car division) as it presently provides the platforms and much of the technology know-how for small efficient powertrains that GMNA seek to re-balance its own domestic portfolio with. The Korean made small cars that have been shipped to the US with affixed Chevrolet badges have been poorly received given their engineering weaknesses, but the Saturn re-branded Opel derived cars, though small in number and incorrectly positioned, have won a modicum of favour.
The problem for any Opel investor seeking to profit from Opel's previous and current high-standing within the GM global empire is that, of course, much of the core design development capabilities could be transferred to GMNA leaving behind an operating enterprise that contains little beyond an empty shell. Potentially, whilst Opel flounders in Europe ill-equipped and short of capital, its operational DNA could be used to revive GMNA's engineering base that in turn pumps out small and medium cars from lower cost US, Canadian and vitally Mexican 'Maquiladora' factories.
This notion cannot be lost on Merkel or any 'white knight' investors, but of course as with any transaction the devil is in the detail of deal due diligence, sale contractual agreement and post-takeover due diligence.
But in the meantime, the German Government perhaps needs to undertake its own Opel Audit to better understand and assess how a very differently structured Opel could possibly enter a new age. That's what a number of international PE firms, Tier1s and 0,5s, the Chinese auto-sector and even GM (as a back-up plan) may well be doing at present.
Merkel should not be moved by public or GM/Opel pressures, but she and her cabinet would be wise to see how exactly Opel could be re-configured to suit different possible suitors with differing entry strategies.
