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German dawdling could keep Opel at standstill

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German dawdling could keep Opel at standstill



General Motors moved closer to resolving the biggest problem left over from its financial crisis this week, but don't be surprised if German domestic politics keep the automaker's vital Opel unit in limbo for a while more.

Opel is GM's second-biggest brand. It trails only Chevrolet in worldwide sales. The Germany-based operation handles the engineering for many of GM's most important vehicles in the U.S. and around the world. Opel is the key to GM's hopes of resuscitating Buick with a lineup of sporty and stylish new cars that will challenge Lexus.

The new Buick Regal is virtually identical to Opel's acclaimed Insignia, the Opel Astra will provide Buick with its first compact car in a year or two, and other future Buicks, from roadsters to station wagons and minivans, may spring from Opel's engineering center. The Chevrolet Malibu, Volt and Cruze all use Opel platforms.

But as spring blooms in 2010, Opel remains the nagging toothache GM can't cure. Like GM's American operations, Opel lost money for years thanks to a litany of bad decisions by management and its unions. More than a year ago -- about the time it appealed to the U.S. government for restructuring help at home -- GM proposed a radical restructuring to shrink Opel, return to profit and save about 40,000 jobs across Europe, around 50% in Germany.

The next time you're tempted to mock the U.S. government as slow and inefficient, spare a moment to be glad you don't live in Germany. While other governments across Europe quickly offered loans to help Opel restructure, German politicians kicked the problem down the road like a World Cup soccer ball.

First they waited until after their domestic elections last year. Then they took a months-long timeout to throw a hissy fit when GM chose to keep Opel rather than selling control to a Russian-Canadian venture that served Germany's geopolitical interests far better than it did GM's business plan.

Now -- more than a year into the process, after GM went through bankruptcy, closed or sold four other brands, and as Opel's unions and other governments across Europe have signed on to the plan -- Germany's political class may find it convenient to delay further.

German voters are in a foul mood. The Greek financial crisis has justified their deep-seated suspicion that the European Union exists mostly as a way to channel German tax money to poor and poorly run countries. That may be good for German business, but German voters aren't feeling charitable toward mismanaged foreign entities.

Add GM's $865-million first-quarter profit, and you've got a recipe for inaction. Some Germans want GM to fix its European business with profits from the American restructuring U.S. tax dollars financed. That ignores the reality that Opel already lost $506 million while the rest of GM made money this year, that Europe's economy looks likely to struggle throughout 2010 and that Germany's economy can't absorb 20,000-plus job losses any better today than a year ago.

German state governments support the $1.2-billion loan guarantee. Opel's German union supports it. Governments in the U.K., Spain and Poland plan to do their part with separate guarantees. GM has already repaid the loans it got from Germany last year.

Despite that, at least three committees set up by the German government are still weighing the question.

GM hoped to resolve the matter this month, but don't be surprised if we're still wondering what will become of Opel this fall.



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