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NINETY EIGHT REGENCY

Icy wind blows at Opel, Saab under Whitacre

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Icy wind blows at Opel, Saab under Whitacre

DECEMBER 2, 2009 - 10:16 AM ET

FRANKFURT (Reuters) -- The abrupt dismissal of General Motors Co. CEO Fritz Henderson by Chairman Edward Whitacre stoked fears today of deeper staff cuts at the U.S. automaker's European arm Opel and the possible liquidation of Saab.

Whitacre, 68, said Tuesday he will become interim CEO as an immediate search for a new CEO and president begins.

Auto industry expert Stefan Bratzel expected Whitacre to slash costs further and faster than planned under Henderson, who once ran GM Europe and knows local labor laws and the culture of consensus well.

"To become competitive, the (planned) 20 percent reduction in personnel and capacity serves more as a floor (than a ceiling)," Bratzel said.

Governments in London, Madrid and Warsaw may also have second thoughts about using taxpayer money to help finance the downsizing of Opel's assembly plants after Henderson's ouster.

"Why would you lend or guarantee anybody money when all of a sudden they've got dramatic upheaval again? It seems like an unstable business," said a works council boss at one of Opel's plants.

Germany's new economy minister, the free-market liberal Rainer Bruederle, renewed his critical stance on handouts for GM on Wednesday and called Henderson's sacking proof there was no clear line in Detroit's strategy.

Several labor sources said they fear a deterioration in already tense relations with Detroit.

One spoke of an "icy wind" blowing toward Opel headquarters in the German town of Ruesselsheim, near Frankfurt, where nearly 2,500 jobs are threatened as the brunt of 9,000 planned redundancies across Europe hits Germany and Belgium.

Threat of liquidation

Following the failed sale of Swedish subsidiary Saab to Koenigsegg Group AB, a consortium of private investors including supercar maker Koenigsegg Automotive AB, Whitacre may also pull the plug on the brand if further substantial delays look inevitable.

Dutch niche sports car maker Spyker Car N.V. said it, together together with its shareholder Convers Group, has expressed an interest in Saab.

"If no buyer emerges, it's very probable that the (Saab) business will be liquidated," Bratzel said, noting Henderson's departure came after negotiations to dispose of the Saab and Saturn brands collapsed in the past two months.

The sale of the Hummer brand to obscure Chinese company Sichuan Tengzhong Heavy Industrial Machinery Co. is also yet to be finalized.

"He had little positive to show for his efforts," said Bratzel, a professor at Germany's University of Applied Sciences in Bergisch Gladbach.

'Slash-and-burn guy'

Texan Whitacre spent much of his career running U.S. telecoms group AT&T and has so far shown little sympathy with the outrage that erupted in Germany last month after GM's board reversed plans to sell Opel to Canadian auto parts supplier Magna International Inc.

In comments to the German press, Whitacre strongly disagreed with Henderson when the CEO showed remorse over the way the decision was handled. "This Whitacre is a slash-and-burn man from the sound of it, so he won't understand the European culture, the markets and the way we do our business," the works council head said.

German taxpayers kept Opel afloat for six months while GM was going through a prepackaged U.S. bankruptcy this year.

Henderson had hoped to convince European governments to help fund a 3.3 billion euro ($5 billion) restructuring of Opel, but Berlin has been hesitant to back a plan that would involve 50 percent to 60 percent of the job losses in Germany.

According to Bruederle, GM is willing to put 600 million euros into revamping Opel while the remaining 2.7 billion should come from European states.

GM had to set the record straight after Whitacre told Germany's Muenchner Merkur last month: "If (Chancellor Angela) Merkel doesn't want to offer anything then we will just pay for it ourself. Maybe that will make your chancellor happy."

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GM had to set the record straight after Whitacre told Germany's Muenchner Merkur last month: "If (Chancellor Angela) Merkel doesn't want to offer anything then we will just pay for it ourself. Maybe that will make your chancellor happy."

Priceless. Should be nominated for the quote of the year.

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