GENERAL MOTORS, owned by the US government, is falling out with the German government about who is going to buy GM Europe.
The German government is to supply billions of euros in loans and guarantees to the buyer, and there cannot be a deal without its support.
The two main contenders are private equity company RHJ, which wants to slash and cut GM Europe down to a manageable and profitable entity, and Magna, backed by the Sibvert bank, which wants to concentrate on the Russian market and produce Opel cars in Russia.
GM favours RHJ (which is tied to the US private equity firm Ripplewood, and used to be called Ripplewood Holdings Japan). It doubled its fiscal year loss to an amount equivalent to 1 billion euros ($1.41 billion).
It plans to slash 9,990 jobs and cut wages, as it engages in first class aggressive restructuring of the company and its workforce.
The IG Metall trade union has said that if the German government and GM agree to hand the plants over to RHJ it will view this act as a declaration of war on the union.
The German government is however continuing to back Magna, which has pledged to keep all of the German Opel plants open.
In true private equity style RHJ is saying that a resale back to GM after it has completed a very profitable restructuring is a possibility.
Chancellor Angela Merkel and President Medvedev of Russia made it very clear at a press conference last week that they both prefer the Magna bid.
GM’s negotiating team is to evaluate Monday’s bids before gathering feedback from Germany’s state and federal governments, European countries also home to Opel plants, and the European Union.
With total assets of just 2.7 billion euros at the end of March and heavy losses from its holdings in minor car parts suppliers, RHJ seems an unlikely candidate to invest 275 million euros in a major auto manufacturer like Opel.
It plans to close Opel Antwerp while Eisenach in Germany would be mothballed for two years.
RHJ is to cut 3,900 jobs in Germany out of 9,900 overall.
Magna is to cut 10,000 jobs throughout GM Europe.
Whoever is the buyer, the fate of the two GM plants in the UK, at Ellesmere Port and GMM Luton are in the balance.
