Berlin annoyed as GM decides to keep Opel

Berlin - German leaders voiced hurt Wednesday after plans to relaunch Opel as an independent, Russian-owned carmaker were nixed by General Motors after 'hundreds of hours' of top-level negotiations. They demanded a refund of the huge credit that saved Opel from bankruptcy in May and were non-committal about whether to offer GM fresh government aid to 'save' thousands of jobs at German factories. Roland Koch, premier of the German state of Hesse, where Opel's main Ruesselsheim factory is located, was typical in his personal 'shock and annoyance' at the collapse of a deal to sell Opel to Russian bank Sberbank and Magna, a Canadian maker of car parts. 'We could have saved ourselves many hundreds of hours,' said Koch, adding, 'This takes us back to square one.' He backed off from his earlier outright criticism of the GM decision, saying, 'We'll see what it means in the next few days.' Government officials demanded a refund by the end of this month of the German government loan of 1.5 billion euros (2.2 billion dollars) which tided Opel over in May. An Opel spokeswoman in Frankfurt said GM would repay if asked. She said Opel had only ever called 1.1 billion euros of the credit line and had already repaid 200 million euros of it. A spokesman for Chancellor Angela Merkel said she was likely to phone US President Barack Obama to complain. Merkel was in Washington just a few hours before GM's board decided in Detroit to cancel the sale. The spokesman, Ulrich Wilhelm, said Washington had told Berlin it had had no influence on the decision. GM is now generally expected to draft a fresh restructuring plan of its own to cut costs at Opel, jettison unprofitable models and lay off surplus labour, with European governments likely to be asked to contribute cash to cushion the blow to workers. Germany is unlikely to be able to say 'no' now, after insisting all year long how important the carmaker is, analysts said. Politicians have spent months negotiating on the issues, and Opel's fate has filled the German media for much of the year. A deal to 'save' Opel by selling it to Magna and pumping another 3 billion euros of German money into it had broad public support in and was a key issue ahead of the September general election. A German Economics Ministry spokeswoman said that if GM applied for aid, this would be studied. The decision divided labour groups. The elected leader of Opel's German labour force ordered strikes in Germany on Thursday in protest, and appealed for strikes at Opel plants abroad, but unions in Britain and Poland welcomed the decision as offering fresh hope to factories in those countries. GM's European subsidiary also has factories in Spain, Belgium and Austria. About half of Opel's 50,000 workers are employed in Germany. 'This is the best decision for Great Britain and our factories,' said Tony Woodley, head of the British trade union Unite. Vauxhall's factories in Ellesmere Port and Luton employ 5,500 people. In Poland, where Opel has a factory at Gliwice, a union leader said GM's decision meant fewer fears for workers. Miroslaw Rzezniczek, deputy leader of the Solidarnosc branch in the factory, told the German Press Agency dpa that workers had perceived a Magna takeover as meaning political interference. Poles also feared Sberbank's role meant Russian domination. In Berlin, Economics Minister Rainer Bruederle called GM's behaviour 'entirely unacceptable.' Bruderle, who took office last week, said he had been sceptical as an opposition politician about Berlin's long-drawn-out efforts to spin off the company. 'Unfortunately it seems my doubts were correct,' he said. The European Commission's competition spokesman, Jonathan Todd, said the European Union 'expects the new GM restructuring plan to be based on solid economic grounds in order to ensure the long-term viability of Opel and sustainable jobs for Opel's workers.' He said state aid could not be tied to insistence that Opel keep its factories located in a particular EU nation. Austrian Economics Minister Reinhold Mitterlehner said GM could receive the same state guarantees for Opel's engine plant in Vienna that would have been available to Magna. The government has talked about a sum of 300 million euros (442 million dollars). The German unions meanwhile withdrew an offer to Magna to forfeit holiday pay and some pay to help Opel restructure. They demanded that GM immediately pay 50 million euros to workers, saying it was 'in arrears.'