General Motors Must Be Out of its Corporate Mind: The Opel About Face
The zombie automotive behemoth that is General Motors would have been long buried but for the intervention of the U.S. government and massive infusions of cash, borrowed by the overleveraged American taxpayer. Supposedly, in exchange for taxpayer support, GM was supposed to downsize and focus and a few core U.S. brands. Part of this restructuring was the elimination of foreign brands, the largest being European-based Opel. After months of negotiations, a consortium led by the Canadian automotive parts firm Magna International Inc., also involving a Russian bank, with significant financial support from the German government, was on the verge of buying Opel from GM. The legal papers were ready to be signed, but now GM’s management and board of directors have had an about face.
The surprise decision, made at the last moment, to scuttle the carefully crafted deal worked out by Magna, was based, so says GM, on a more positive outlook for their business. Hours after the decision was made, GM also announced it was axing 10,000 Opel employees, sending the workers of the firm’s German factories on strike.
What we have here is an impulsive, instinctive example of flawed corporate decision-making, choosing to discard the months of international negotiations for a sale that would have taken Opel off of GM’s back and balance sheet. Instead, we have a clique that wants to hold on to the fantasy that GM remains the world’s largest automaker. As for the U.S. taxpayers who will be the ultimate losers, the “new” General Motors couldn’t care a wink.
