Opel faces job cuts as GM cancels deal with Canda-Russia
Some ten thousand jobs across Europe are on the verge of being lost, some of which would have been saved under the abandoned deal. The decision has come as a shock to both Russia and Germany.
The first consequences of the General Motors’ U-turn on the deal it had earlier made with Canadian car-parts manufacturer Magna, and Russia’s largest bank – Sberbank.
“I came here to find out what exactly does General Motors want, given what they’ve done with us in the past weeks and months,” said a German worker at a rally
GM was going to sell a 55% stake in Opel to the Russian-Canadian consortium with a deal only finalized in September. Magna was planning to invest up to 700 million euros, and Sberbank promised to save jobs and boost production using a plant in Central Russia.
All of this is now in the past after the agreement was overturned following a six-hour board meeting on Tuesday night.
“The American banks don’t value unions,” said Max Keiser, financial analyst.
“The American banks only value deals, transactions and money. And these are 10,000 sacrificial lambs to help them pay Christmas bonuses!”
Germany’s Chancellor Angela Merkel called the GM cancellation “totally unacceptable”. She demanded the repayment of a 2.2 billion dollar bridging loan from the German taxpayers. Ironically, this money was actually meant to safeguard German jobs.
“Both the German and the Russian government lobbied very hard for this deal,” noted journalist Christoph Rauwald.
“The only winners I can actually think of at the moment would be the board members on General Motors’ side who pushed for this change in plans”.
Britain houses two GM plants. According to Business Secretary Lord Mandelson, the UK will support an appropriate deal if GM can come up with a plan that redistributes job cuts more evenly across Europe.
As GM now has to begin restructuring its business, German workers were the first to strike.
This won’t harm our interests – Putin
Russian Prime Minister Vladimir Putin said the country will continue to work with foreign car manufacturers, including those in the US, but did admit GM’s decision came as a surprise. However, according to Putin, General Motors’ decision won’t harm Russia’s interests.
“This won’t infringe on our interests, but does speak to the idiosyncratic attitude the American partners have toward their counterparts,” Putin said at a government session on Thursday.
He also added that Russia was prepared to support the sale, both politically and economically.
“We were, for example, prepared to issue state guarantees of 250 million Euro to ease the burden on the German government and German financial institutions,” he said.
He noted that the money would have been provided “on the condition that – and of course we had some interest in this ourselves – that some of this went into the Russian auto industry as part of the Opel rescue package”.
The prime minister pointed to the fact that General Motors had not warned anyone of its intentions.
“And all of us were presented with an accomplished fact, despite the agreements reached earlier and documents signed, including documents of a legal character,” Putin said.
He went on saying that “it was a lesson, indeed”, and Russia would have to take into account “this style of relationships with partners in the future”.
Even though Moscow says the rejection will not harm Russia's interests, the deal was meant to deliver new technology, vital for the survival of the country's auto industry.