General Motors (G.M.) is now safely out of bankruptcy. All investors in G.M. have taken a "haircut" to trim its financial obligations. It has received billions in aide from both the U.S. and Canadian governments (including billions from the Ontario government). In fact, the United States government is now the largest shareholder. The company has new cost cutting contracts with both the United Auto Workers and the Canadian Auto Workers. So the G.M. of today is not the same company it was a mere six months ago.
I think it is very prudent for G.M. to take its time and even reconsider, as the company is doing, the sale of its European entity, Adam Opel GmbH. Opel is a substantial company with approximately 50,000 employees in Europe, 25,000 of them in Germany.
There are 2 serious bidders for Opel. One is the Belgium holding company RHJ International and the second is a joint bid by Magna International and Russian bank Sberbank. I am sure both would do a very good job. I favour the Magna bid because Magna is a large Canadian company. My readers will remember that Fiat also made a play for Opel as the company was closing its deal on Chrysler. The Opel deal is very political, and politics played a big role in Fiat/Chrysler being ruled out.
Right now there is an election going on in Germany. So saving Opel and all these jobs is a big election issue. The German government led by Chancellor Angela Merkel is willing to provide 4.5 billion euros ($6.9 billion Canadian) in loan guarantees.
There are big German car companies doing well in North America, Mercedes and Volkswagen come to mind. Nothing wrong with this. In the interest of Fair Play and if G.M. decides to keep Opel, the same funding should be offered by the German government to the new G.M. After all, the U.S. 3 billion "cash for clunkers" programme was offered to all car companies.
For the North American auto industry to survive long term it must have global reach and Opel provides part of this for G.M.
