Auto crunch Germany’s ruling parties must have been praying that the new owners of General Motors Europe would have the good grace to wait until after the September 27 election to announce how they will restructure Opel’s bloated production lines. No such luck. The ink had barely dried after GM signed Opel over to Canadian car parts maker Magna and Russia’s Sberbank when they announced they would fire one-fifth of the group’s 50,000 European employees within a year – 4,000 in Germany.
This should not have come as a surprise: the car industry’s troubles are clear for all to see. Global vehicle sales had fallen by 20 per cent from their peak by March; the boost from “cash-for-clunkers” schemes is bound to be temporary. Even a strong recovery would leave automakers with huge overcapacity. Against this background – which the sale of Opel does nothing to change – not admitting the necessity of job cuts is either delusional or dishonest to voters.
So when Germany’s government put up €4.5bn in loans and guarantees to ensure that Magna prevailed in GM’s garage sale, it presumably expected to get something in return. Other countries hosting Opel plants certainly think so. Kris Peeters, premier of Belgium’s Flanders region, claims that an Opel plant in Antwerp that Magna plans to close is more competitive than some of the four German plants the group has promised to protect.
They are right to worry. Magna co-chief executive Siegfried Wolf’s assurance that restructuring will be guided purely by commercial considerations is laughable when the group is accepting financing that depends on political decisions. The German money is a move in a negative-sum game of trying to push job cuts across the border.
Playing that game will not benefit Europeans. Their leaders know this – those of Belgium, Spain, and the UK have, to their credit, not tried to outbid Germany to keep their plants open, calling instead for the European Commission to ensure Germany is not violating the rules of the single market.
Neelie Kroes, Europe’s competition commissioner, is to be commended for asking whether Germany illegally invoked the temporary relaxations of state aid rules agreed because of the financial crisis. She now needs the strong support of José Manuel Barroso, Commission president, who has seemed less concerned to defend the single market than his own job.
Ms Kroes may have to wait until the morning of September 28 before Germany will listen. Then she should speak all the louder.
