MOTORSNEWS: TAKING OVER OPEL. A possible merger between Fiat and Opel has become a burning issue for Germany – and who will be rescuing whom, asks DEREK SCALLYin Berlin
GERMANY HAS been in love with Italy for a century and a half, since the national poet and playwright Wolfgang von Goethe raved about the “land where the lemon trees grow”.
But beyond Italian food and Italian holidays, Fiat’s ambition to take over Opel has revealed that Germany’s love of la dolce vita has its limits.
Opel has been a subsidiary of General Motors for over 80 years, yet is still seen here as an extremely German company. For that reason, a sale to the Italians is viewed in many quarters as a final humiliation for a company that, though it is a long way from its Manta glory days, continues to enjoy a considerable level of public affection.
More importantly, the company employees 26,000 Germans directly and many times that number in suppliers – and this is an election year.
Politicians of all hues are anxious to find a solution that saves Opel and the maximum number of jobs possible – but keeping the Italians out of Opel has become as important a priority for German politicians and unions.
“Fiat has similar problems to Opel and will have to reduce capacity as well,” said Roland Koch, state premier of Hesse, home to two Opel plants. “They will have to get the idea out of its head that only Opel will pay the price for a take-over.”
A Fiat-Opel merger would create a new European number two, behind Volkswagen, and give the new company a capacity of up to six million cars a year – the kind of scale Fiat chief executive Sergio Marchionne has said would be critical for survival in the industry.
Industry analysts have acknowledged the cost benefits of intensifying existing co-operation between Opel and Fiat on engines and designs – the Corsa and the Punto start on the same drawing board.
But, beyond that, it is less clear what short-term gains the merger would provide: the two companies desperately need shots in the arm, yet both compete in essentially the same market.
“The real upside would come from restructuring Opel/Fiat’s capacity footprint, and it is not clear if there is the political will to do this,” said JPMorgan bank in a research note to investors.
It’s clear that no deal can be done without the assent of Germany’s powerful unions and, to date, they are suspicious of Fiat’s intentions, suggesting the Italian interest in Opel didnt extend beyond the promised German state aide.
“Fiat has no money,” said Opel works council chief Klaus Franz. “They want a rescue plan for Fiat, not for Opel.”
Union leaders have also remarked sardonically that, when it comes to Fiat, they are “now the bride”, a reference to an alliance between GM and Fiat that ended acrimoniously in 2005.
Germany’s European Commissioner Günter Verheugen has made similar noises, expressing doubts about how Fiat could finance the deal – prompting protest from Rome.
“Verheugen’s comments constitute an interference in the industrial choices of private companies, [which is] even more unacceptable, considering that one of the companies in question is of the same nationality as the Commission vice-president,” said foreign minister Franco Frattini in a statement.
Mr Marchionne has gone on the offensive in recent days, promising that existing company debt will not be taken into the new company.
He has tried to make the marriage more palatable for Germans by promising to retain all German factories, if not staffing levels, and by citing Volkswagen as his role model of one company with many brands.
But the Italians have a lot of work to do to convince the sceptical Germans that they are the right partner for Opel.
Politicians, unions and workers in Germany are hoping their white knight is Frank Stronach, the 76-year-old billionaire founder of auto parts company company Magna.
Born in Austria in 1932, Stronach has six decades of experience in the industry since, three years after emigrating to Canada in 1944, he won his first contract providing sun visors for General Motors.
His business grew steadily to include car seats and car locks; today Magna operates in 25 countries with 82,000 employees, producing for all the big industry players.
The company is heavily involved in the outsourced manufacturing business, building the BMW X3 and the Peugeot 308 coupé.
“GM’s a major customer and they own Opel. Whenever there are things going on, we’ll always engage if there’s a possible win-win,” said Manga co-chief executive Don Walker in an interview this week.
But, two years after a failed bid for Chrysler, industry analysts have expressed doubts that Magna is the right fit for Opel.
“Magna is also dependent on Opel competitors to Opel and these competitors will be put off if Manga itself becomes a competitor,” says Prof Stefan Bratzel, auto analyst at the Bergisch Gladbach Technical College.
“Magna can, at best, only be a temporary solution, because Opel is simply too small to survive as a stand-alone company.”
The greatest caveat surrounding a Magna offer is the partners it would bring to the table. The most likely partner is Russia’s GAZ, builder of the Wolga, and the Sberbank, 60 per cent owned by the Russian central bank.
Allowing one of Germany’s car companies to, indirectly, slip under Kremlin control could open up another can of political worms.
For now, the biggest open question is of price. Neither Fiat nor Magna has said how much it is prepared to pay for the GM subsidiary.