German government meets with European Opel stakeholder states

Sep 15, 2009, 12:42 GMT

Berlin - The German government gathered all European states in which Opel has factories for a meeting on Tuesday, to discuss ways of distributing state funding for the ailing carmaker.

The talks come amid worries that German Opel factories could get preferential treatment by the new owners led by Canadian-Austrian car parts manufacturer Magna, after Germany pledged a 4.5-billion-euro rescue package to keep the European arm of General Motors afloat.

Magna plans to axe 10,500 Opel jobs across Europe, of which more than 4,000 are to be cut in Germany alone, Magna's European chief Siegfried Wolf confirmed at the Frankfurt International Motor Show (IAA) on Monday.

The meeting in Berlin was also being attended by a director from the office of Neelie Kroes, the EU's competition commissioner, who will then report back to Brussels, a spokesman told the German Press Agency dpa.

In a speech to the European Parliament on Monday, Kroes said state aid 'cannot be subject ... to additional conditions concerning the location of investments and/or the geographic distribution of restructuring efforts.'

Of the Magna deal Kroes said, if the German authorities 'have effectively linked the provision of aid to a single bidder,' she would want to know, 'why they regarded that bidder's business plan as preferable from an industrial and commercial point of view.'

Meanwhile, Opel workers across Europe opposed Magna's plans to shut down the factory in Antwerp, Belgium. 'We will fight against the closure,' said Opel's union leader Klaus Franz at the IAA.

German car manufacturers BMW and Volkswagen said they were rethinking their cooperation with Magna, since the car parts supplier had become a competitor.

'Until now we have had good cooperation with Magna, but their strategy has changed,' said BMW's chief financial officer Friedrich Eichiner.

On Monday, VW chairman Ferdinand Piech had warned, 'As a corporation, we don't like it when our subcontractors become our competitors.'

VW is one of Magna's top clients.

Wolf previously said none of Magna's clients had threatened to jump ship over the Opel deal, adding that the car parts business would be kept strictly separate from the manufacture of vehicles.

General Motors announced last week it would sell 55 per cent of its unprofitable European subsidiary Opel to the Canadian-Austrian car parts supplier and its Russian partner Sberbank.