The The Opel Ampera prototype is still making its rounds...and Opel remains essential in GM’s global product development.

Needless to say that the future of Opel in Europe has been in the spotlight, and it is therefore only fitting that we start our column “industry insight” with this subject. Much has been said about keeping car manufacturing jobs in Europe, and the question we want to deal with here is, what can national governments do to keep jobs in their respective countries? Or better, what does the European framework allow them to do?

Hans Knol ten Bensel

Some rude awakenings...

Indeed, national governments, more specifically Germany and Belgium, were rudely awakened lately when GM decided not to sell off Opel after all to Magna and its Russian bank partner Sberbank. There were several reasons for this.

GM is now a different company, having received some 50 bln USD from the US government, and being also buoyed by improvements within the economy and its own business. The further reason is that the future global car market is also focusing on smaller vehicles, and Opel has the expertise and know how to design and engineer them. This is in my opinion, an essential pillar in the GM strategy: Opel plays an essential role in GM’s global product development activities, its global powertrain activities and their technology strategies globally, and therefore it is important to keep it. These are also the exact words of John Smith, GM group vice president of corporate planning and alliances.

The Opel Antera GTC prototype...

Of course, there is still a global manufacturing overcapacity, as everybody knows. Keeping Opel means restructuring and job losses, and this is where the shoe hurts for the EU governments.

… with a reaffirmed stance from the European Commission…

At first, there was utter dismay about GM’s “volte face” from the German government and last but not least its chancellor Angela Merkel. But the German first lady has now realized that the deal with GM is not widely different from the deal with Magna. In the meantime, the political constellation of the German government has also fundamentally changed, and we see now a more liberal “laissez faire” policy of government intervention towards private enterprise, to the extent that the German government is now less eager to subsidize  Opel ‘s restructuring with more than 4 billion Euros…

International car builders will now have to deal in Europe with Gunther Verheugen, Vice President of the EU Commission, responsible for EU industrial policy...   

But what is even more important in these matters is the stance of the European Commission. The European Commissioner for Competition Neelie Kroes had scrutinized the earlier German subvention proposal. Her conclusion: no government subventions could be linked to non-economic conditions, like for instance the localization of manufacturing activities.

EU Commissioner Neelie Kroes: Member States cannot tie geograpical employment conditions to their subsidies to the car industry...

This has been reasserted expressly by the European Commission on November 23. The commission, more specifically Commission Vice-President Günter Verheugen, Competition Commissioner Neelie Kroes and the Commissioner in charge of Employment, Vladimir Špidla, took the initiative to organize an informal meeting with ministers in charge of the automotive industry and with a representative of GM, in fact GM International Operations President Nick Reilly.

Commissioner in charge of Employment, Vladimir Spidla: workers need to be informed about restructurings... 

The aim of the meeting was to respond to the urgent need for European coordination. The meeting reconfirmed also the consensus that EU rules (in particular on state aid and the Single Market) must be fully respected and that no national measures should be taken without prior information and coordination with other involved countries and the Commission. I used bold italics here because this is a most important principle. This means not “going it alone” any more by national governments, no informal and bilateral deals “under the table…”

But there is more: in this context it was agreed that any financial support by one or more Member States should be based strictly on objective and economic criteria, and not include non-commercial conditions concerning the location of investments and/or the geographic distribution of restructuring measures.

The Chevrolet Volt...

It is essential for the Commission that subsidy races between Member States and the fragmentation of the Single Market should be avoided.

The Commission grants also an impressive liberty to the car manufacturers in question: state support should (only) facilitate the efforts of manufacturers to adapt production capacities to market developments. Point final. No territorial promises, clauses, agreements, whatsoever!

Let this be a stern warning to over-zealous national governments… the principle of a single European market where competition is not (regionally) distorted is paramount.

Worker protection?

The EU commission has also an axe to grind here. Hence the presence of the Commissioner in charge of Employment  Vladimir Špidla at this meeting. But the protection does not go very far.  The commissioners only stated that this restructuring in the automotive industry must take place in rigorous compliance with the European and national rules in force regarding information and consultation of workers in the case of any restructuring operation in the EU.

and the Opel Ampera...

Last but not least the commission members agreed with the national ministers concerned that Member States will not make any formal commitments to GM before the next coordination meeting, scheduled to take place on December 4…

Some stern conclusions… and further questions

The conclusion is that multinational car manufacturers will have to deal with a EU Commission from now on, which coordinates the initiatives form the member states, agreeably a more formidable negotiation partner for industry.

On the other hand, national politicians are having now a clearly more delimited role: they can only act as facilitators to the car companies in working out their production capacity strategies, only hoping that it will keep jobs in their country, but nothing more…

Of course we would like to know more about the exact importance and role of Opel in the GM concern with respect to the GM’s global product development activities, its global powertrain activities and technology strategies. We asked the Opel (press) people about it. When we get this information, we will tell you more…

Hans Knol ten Bensel    

John F. Smith, GM Group Vice President Corporate Planning and Alliances: Opel technology is important for GM..

David N. (Nick) Reilly, GM Executive Vice President, President, GM International Operations, negotiates the restructuring of Opel...