General Motors seeks EU government bail-outs
-
GM currently provides direct employment to over 50,000 people in the EU (Photo: EUobserver)
American, Detroit-based car manufacturer General Motors has asked EU governments to come to its rescue as the company struggles with a major cash-flow problem that threatens thousands of jobs in Europe.
Speaking at the Geneva motor show on Tuesday (3 March), the company's chief operating officer, Fritz Henderson, said the company could run out of cash supplies by as early as next month, reports the Financial Times.
Join EUobserver today
Become an expert on Europe
Get instant access to all articles — and 20 years of archives. 14-day free trial.
Choose your plan
... or subscribe as a group
Don't miss out on
Our exclusive news stories and investigations. Influential. Investigative. Independent.
Why join?
Watch our founder Lisbeth Kirk explain the reasons in this 30-second video.
Already a member?
"We would try to stay alive, but there's no guarantee we could stay alive," he told reporters at the motor show. "We would become insolvent at that point."
GM provides direct employment for over 50,000 people in Europe, with major plants located in Germany, Spain, Poland, Belgium and the UK.
About 25,000 of these jobs are in Germany, 7,000 in Spain and close to 5,000 in Britain. Another 5,000 jobs are located in Sweden, mainly at carmaker Saab, which is owned by GM.
However, the company indirectly provides hundreds of thousands of other jobs throughout Europe in part suppliers and other support industries.
GM management estimate the company is currently running at close to 30 per cent overcapacity in Europe due to falling sales, a problem it says could be solved by closing three production plants.
They have been in talks with several European countries over supplying emergency aid and have asked Germany in particular to provide a €3.3 billion cash injection in exchange for shares in the company.
Nevertheless, government officials worry that the money would simply work its way back to Detroit with little benefit to workers in Germany, where GM's Opel unit is its largest component in Europe.
GM Europe's president, Carl-Peter Forster, appealed to the British government to provide support as well.
"The British government can't expect the German government to carry all that burden," he said. "It has to be a shared burden."
So far Britain has sanctioned €2.6 billion (£2.3bn) in loan guarantees to the automobile sector as a whole but has resisted bailing out individual companies.
GM is keen to keep its Opel brand, but could allow Saab fall into bankruptcy unless the Swedish government steps in with a restructuring package.
Mr Henderson said GM was determined to cut weaker units in order to keep more successful ones alive.
"The Opel brand is not like Saab," Mark Fulthorpe, an analyst at CMS Worldwide, an automotive consultant in England told Bloomberg news agency.
"Opel is the volume driver for Europe and also for lighter, more fuel-efficient cars on a global level."
