German governors to debate aid for GM’s Opel after minister rejects federal help

German regions considering aid for GM’s Opel

BERLIN — German Chancellor Angela Merkel met with regional leaders Thursday to try to find ways to help GM’s Opel unit, after her economy minister rejected giving the automaker loan guarantees from a federal bailout fund.

The meeting with the governors of four states that host Opel plants, which employ some 24,000 people, ended without the leaders announcing a tangible plan. But Hesse governor Roland Koch said the states had agreed to “continue to negotiate with close coordination” on the issue.

“It was clear today that the states want to help with the financing,” Merkel said.

The meeting comes a day after Economy Minister Rainer Bruederle, from the junior party in Merkel’s coalition, denied GM more than euro1.1 billion ($1.2 billion) in loan guarantees from a fund for companies hit by the economic crisis.

The Free Democrats defended their minister Thursday, saying Bruederle had made the “correct decision” and that it was fair.

“A contradicting decision … would be a punch in the face of workers at Ford, Volkswagen or other companies competing with Opel,” Free Democrats general secretary Christian Lindner told reporters.

Merkel suggested after meeting with the governors that even if the bailout package money was not available, Opel could still apply for federal research and development funds, “like any other automaker.”

Opel CEO Nick Reilly expressed disappointment at the decision, but said restructuring plans would continue and he was not considering further plant closures.

Reilly also said he hoped the states would be able to come up with 25 to 50 percent of the sum rejected.

Merkel said Bruederle planned to meet with Reilly for talks, but did not specify when.

Before the meeting, several of the governors indicated they were willing to find ways to help the automaker as it restructures in an effort to become more competitive, following the bankruptcy of U.S. parent company General Motors Co.

Kurt Beck, governor of Rhineland Palatinate, recalled Berlin’s reluctance to extend funds to GM last year, based on fears that German taxpayers’ money would wind up in the United States.

“Now we can hardly turn things around and say that U.S. taxpayer money that has flown to General Motors should be spent in Germany,” Beck told ARD.

In November, GM’s board, chaired by current CEO Ed Whitacre, voted to abandon plans to sell Opel to a group led by Canadian auto parts supplier Magna International Inc.

At that time, GM was still losing money, the global auto market was still in a slump and Germany and other European countries seemed willing to provide aid.

In May, GM reported an $865 million first-quarter profit — its first positive quarter in three years. The profit came as global auto sales started to recover and despite a $506 million loss in Europe, the only place GM lost money.

Bruederle said he was convinced that GM has “sufficient funds” to carryout its restructuring plans.