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GM Board Balks and Decides to Retain Opel!

Control of product development and patents overrules speculators and GM's need for cash.

by on Nov.03, 2009

The Board of Directors at reorganized General Motors Company has decided to keep Opel and Vauxhall and will initiate a restructuring of its European operations “in earnest,” it said late today in a statement.

“GM will soon present its restructuring plan to Germany and other governments and hopes for its favorable consideration,” said Fritz Henderson, president and CEO. “We understand the complexity and length of this issue has been draining for all involved. However, from the outset, our goal has been to secure the best long-term solution for our customers, employee, suppliers, and dealers, which is reflected in the decision reached today. This was deemed to be the most stable and least costly approach for securing Opel/Vauxhall’s long-term future.”

GM said its plan entails total restructuring expenses of about €3 billion, significantly lower than all bids submitted as part of the investor solicitation.

GM will work with all European labor unions to develop a plan for “meaningful contributions” to Opel’s restructuring.

While Opel continues to “outperform against its viability plan assumptions and immediate liquidity is stable,” time is of the essence.

“While strained, the business environment in Europe has improved.” Henderson said. “At the same time, GM’s overall financial health and stability have improved significantly over the past few months, giving us confidence that the European business can be successfully restructured. We are grateful for the hard work of the German and other EU governments in navigating this difficult economic period. We’re also appreciative of the effort put forward by Magna and its partners in Russia in trying to reach an equitable agreement.”

Henderson added that GM also hopes to build on its already significant business in Russia and to resume work directly with GAZ to contribute to both the modernization of its operations and the joint development of the Russian vehicle market on a mutually attractive basis. More details on the next steps in the restructuring will be provided as the plans and developments warrant.

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3 Responses to “GM Board Balks and Decides to Retain Opel!”

  1. Ron Arnold says:

    An incredible decision! All that work done by other companies, partners and governments. If this works (in returning Opel/Vauxhall to profitability), it will be hailed as a bold decision, if it fails it will be the death knell of GM current financial management. Wow!

  2. Ken Zino says:

    Ron: Good observation!

    Given the choice, GM needed to control its product development.

    The question remains whether the governments will support, and if, very big if, the German unions decide to cooperate.

  3. Ken Zino says:

    Magna International Inc. (TSX: MG.A, NYSE: MGA) today announced that it has been advised by General Motors (“GM”) that the GM Board of Directors has decided to terminate the sale process for Opel.

    Siegfried Wolf, Magna’s Co-Chief Executive Officer stated: “We understand that the Board concluded that it was in GM’s best interests to retain Opel, which plays an important role within GM’s global organization. We will continue to support Opel and GM in the challenges ahead and wish to thank everyone who supported the Opel restructuring process for their tireless efforts and dedication over the past several months. In particular, we wish to thank our partner, Sberbank, for its significant contribution and support throughout this process.”

    We are the most diversified global automotive supplier. We design, develop and manufacture technologically advanced systems, assemblies, modules and components, and engineer and assemble complete vehicles, primarily for sale to original equipment manufacturers (“OEMs”) of cars and light trucks. Our capabilities include the design, engineering, testing and manufacture of automotive interior systems; seating systems; closure systems; body and chassis systems; vision systems; electronic systems; exterior systems; powertrain systems; roof systems; as well as complete vehicle engineering and assembly.

    We have approximately 72,000 employees in 242 manufacturing operations and 86 product development, engineering and sales centres in 25 countries.