GM Europe chief still hoping for German assistance

AP News
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Posted: Dec 06, 2009 12:37 PM

The new president of GM Europe said Saturday that he was still hoping for German government financial assistance to restructure Opel, but added that even if Berlin fails to come through it will not mean more layoffs in the country.

Nick Reilly, who was named president of GM Europe on Friday after previously serving as president of GM International Operations, said in a conference call that Adam Opel GmbH was not going to be able to come up with the euro3.3 billion ($4.97 billion) it needs on its own.

"There is a belief out there that GM has sufficient money in the U.S. that it can spend in Europe," Reilly said according to a transcript of the call provided by Opel. "That is not the case."

The remarks come after German Economy Minister Rainer Bruederle on Friday was critical of GM, saying that the company only wants to put 20 percent of its own money toward the restructuring costs and that he thought General Motors "has a lot of resources."

Opel and its sister Vauxhall employ some 48,000 people in Europe, more than 24,000 of them in Germany.

GM shocked European governments and employees last month by abruptly canceling the planned sale of a majority in Opel to a consortium of Canadian auto parts maker Magna International Inc. and Russian lender Sberbank.

Germany now appears reluctant to offer GM the same huge loans it had promised Magna _ and has yet to pledge the company any more money.

Reilly said GM has prepared an application for the German government for funds, though did not say how much.

"They were willing to support the Magna deal, so we expect some support for our plan..." he said. "But regardless, the German government decision will not lead to more or fewer layoffs in Germany. The expectation is that we will get financial support from most European governments. We would be disappointed if Germany is the only country which does not participate."

Of the euro3.3 billion ($4.97 billion), Reilly said euro1 billion ($1.51 billion) would be for restructuring while the rest would go primarily toward investments in new products.

Reilly has previously said that the restructuring program will result in about 9,000 job cuts across the continent, and that the future of Opel's plant in Antwerp is "uncertain."

He refused to comment further on Antwerp's fate, saying that an announcement should be made in the next two to three weeks.

"We will and are looking for alternatives," he said. "But bear in mind, we must reduce capacity and we must reduce structural costs."

He also added that his new management team would be announced next week.