General Motors has withdrawn all applications for state aid from European governments and will now fund the restructuring of Opel on its own.
Opel CEO and head of GM Europe, Nick Reilly, said the company became frustrated with the slow-moving funding negotiation process and could no longer afford to hold off on its restructuring.
“We were led to believe that loan guarantees made available to other European companies under the EU program to help offset the impact of the global economic crisis would be equally available to Opel/Vauxhall. But, after a very long process defined by governments, this has turned out not to be the case.
“Our application was put in more than six months ago and we followed the process that the governments laid out and asked us to follow. We had no idea it would take this long,” Mr Reilly said, as reported by AFP.
GM announced in November 2009 that the restructuring of Opel would lead to job cuts of up to 8300 employees, 4000 of those to be in Germany.
The reorganisation is expected to cost around 3.3 billion euros ($4.7 billion) to finance, with plans to overhaul the Opel product line-up within five years. A statement from Opel said the company now had the opportunity to go forward and grow rather than remain weighed down by the troubles of its past.
“In these circumstances, and given the need to progress the plan quickly, it has been decided to fund the requirements internally. GM’s recently improved financial strength has also been a catalyst for making this decision,” it said.
GM had already agreed to contribute 1.9 billion euros ($2.7 billion) to the restructuring plan, and its decision to go it alone was heavily influenced by last week’s revelation that Germany would refuse to chip in around 1.1 billion euros ($1.6 billion).
Britain and Spain were reportedly prepared to commit around 330 million euros ($470 million) each in bank loans to assist in the restructuring plans.
(with Automotive News Europe, AFP)