Opel Between Rock And Hard Place: Bankruptcy The Only Way Out?

Opel's stand-in boss Stephen Girsky demands changes from his workforce. "Our successful revitalization demands from all of us that we accept to do business differently than before, and that we do it quickly," Girsky wrote in an email to staff, cited by Germany's BILD Zeitung. How different, remains unsaid. Workers and unions expect a fight and gear up for one. Opel is running out of money. Bankruptcy rears its head. GM has an agreement with the unions that forbids plant closures or firings until the end of 2014. Then, the closure of an Opel plant (all eyes on Bochum) can cost some €1.5 billion ($2 billion) to pay for the legally mandated golden parachutes and other restructuring costs, Germany's Handelsblatt learned from sources at GM. This spells relief not before 2016. Detroit wants relief now, but the hands of Opel managers are contractually tied. Dismissed Opel chief Karl-Friedrich Stracke tripped over his tied hands. Instead of getting things done faster, Stracke offered a deal that takes even more time. GM offered to keep Bochum open until the end of 2016, that's two years longer than GM's contract with the unions requires. In return, GM wanted salary concessions from its workers. That deal has been approved by Opel's supervisory board, but not by the unions. Back to plan A. Put yourselves in the shoes of an Opel worker. You know that the company wants you gone. You also know that you can't be fired before 2015, and if they fire you, they have to give you up to $200,000 (depending on seniority). Then, you can collect unemployment , up to $2,500 per month and up to two years long. What would you do? I bet you would dig in. Leave now, and you lose. If Detroit wants results now, then the deal with the unions must be broken. The unions think that Girsky in charge means a radical solution. The unions offer equally radical answers. "We will make sure that contracts are being kept," IG Metall boss Berthold Huber told the Sueddeutsche Zeitung. "Whoever wants to give up Opel should know: those would be the most expensive plants closures a company ever attempted in Germany." Faced with bankruptcy if the issue is being forced, GM could very well consider another option:  Bankruptcy. It has been leaked to the Sueddeutsche that GM has given Opel an €2.5 billion ($3 billion) line of credit. It is unknown how much of that line has been used. "Either the line is extended, or Opel makes do with the current line," says the paper. "No more money means bankruptcy." Another solution would be to sell Opel. That is the most unlikely, says the Sueddeutsche. "Nobody wants Opel under the circumstances. Not even for free." And what happened to Stracke? BILD says he has been sent to Russia.   from The Truth About Cars http://www.thetruthaboutcars.com

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