The Automotive Industry and European Integration by A. J. Jacobs

Author:A. J. Jacobs
Language: eng
Format: epub
ISBN: 9783030174316
Publisher: Springer International Publishing

GM’s Last Years in Spain, 2009–2016

The agreement with the U.S. Government required GM to submit an aggressive restructuring plan to the authorities by March 31, 2009. This occurred on February 17, 2009, when a revised plan was accepted that requested $30 billion in government aid and stated that GM would (1) make even more significant job cuts, (2) drastically reduce its retirement benefits commitments, (3) close five assembly plants, (4) slash its dealer network, and (5) phase out or sell off its Hummer, Pontiac, Saab, and Saturn divisions.18

Meanwhile, Adam Opel GmbH was asking the German and EU authorities for more than $4 billion in loan guarantees to protect Opel’s 29,000 workers in Germany. Subsidies were also requested from Belgian, British, and Spanish governments. The primary goals of these efforts were to either (1) sell up to 50% of Opel/Vauxhall to outside investor, possibly the German state, or (2) downsize and spinoff Opel altogether from GM, making it more attractive to a potential buyer. At the time, the automotive components and contract car manufacturer, Magna International of Canada, along with Fiat of Italy, Beijing Automotive of China (BAIC), and the leveraged buyout firm RHJ of Brussels, all were expressing interest in GM’s European assets.19

With nothing resolved, and with projected losses of $3.8 billion for the first half of 2009, the parent GM filed for Chap. 11 bankruptcy protection in America on June 1, 2009. The U.S. Government would then agree to inject $43 billion in cash and $7 billion in direct loans into the troubled automaker to rescue it from bankruptcy. When this occurred on July 9, 2009, the Government held a 60.8% majority, but not controlling, equity interest in GM. Conversely, the terms of the U.S. bailout stipulated that none of its funds could be used for the automaker’s European or Asian operations. In response, the GM stepped up its efforts to downsize and sell off its European operations. This proved not so easy, as political opposition to any bailouts in Germany and in other countries, stalled any efforts to revive GM Europe’s car divisions.20

In the interim, and as discussed in Chap. 5, in June 2009, Magna, backed by Russia’s Sberbank and the GAZ auto group, appeared to have emerged as the new parent of GM Europe’s Opel and Vauxhall divisions. According to a nonexclusive memorandum of understanding signed in May, the Canadian automotive components were to pay $2.1 billion for a 55% controlling stake in Opel/Vauxhall. GM was to retain a minority 35% share in the operations, and GM’s European employees were to hold the final 10% stake in the new automaker. The agreement was contingent on the Magna receiving $6.4 billion in aid from Germany and other European nations. This deal was in flux, however, as the Canadian firm, unions, and national governments could not come to an agreement on either aid or concessions, including which factories were to bear the brunt of Magna’s proposed job cuts.21

According to the details released on May 26, 2009, Magna proposed to

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