German government says ready to help Opel

BERLIN (Reuters) – Germany said on Monday it was ready to help General Motors’ struggling German unit Opel, though it would make sure any aid did not seep over to the U.S. parent or trigger a flood of demands for support.

Chancellor Angela Merkel is due to meet Opel representatives at 1530 GMT on Monday. Opel has asked the federal government and German states to help it through a financial rough patch that has been aggravated by troubles at its parent GM.

“I think the government will do everything that is necessary to help the company but on the other hand, it will of course respect the consequences with regard to dealing with other companies,” government spokesman Ulrich Wilhelm said.

“This cannot be about taking action that we would then not be able to maintain with regard to similar cases,” he added at a regular government news conference.

GM said earlier this month it had burned through $6.9 billion in cash in the third quarter and warned that its cash holdings would fall short of the minimum needed to run its business without new funding or other drastic action.

The German government has said it wants to make sure any aid it provides to Opel is not transferred to its U.S. parent.

Merkel spoke briefly at the weekend with U.S. Treasury Secretary Henry Paulson about Opel’s problems, Wilhelm said.

Earlier, Finance Minister Peer Steinbrueck said any government support would be judged on a case-by-case basis.

“BANDWAGON JUMPERS”

“The government will have to deal with possible problems at Opel if some 25,000 jobs are affected, as well as suppliers,” Steinbrueck told Deutschlandfunk radio, but added that the issue also raised competition and legal problems.

“I don’t want to invite all kinds of bandwagon-jumpers to come to the German government and say: ‘If you’re helping Opel, I will tell my story in such a way that you can’t refuse to help me too’,” he said. “It will depend on individual cases.”

Following Merkel’s talks with Opel officials on Monday, German Foreign Minister Frank-Walter Steinmeier, Merkel’s Social Democratic challenger in next year’s general election, will hold talks with car worker representatives in the evening.

On Tuesday, officials from the Finance Ministry, Economy Ministry and German states will hold talks to discuss the auto sector, where demand has been hit badly by the financial crisis.

Troubles in the car sector are a major worry in Germany, Europe’s largest economy, where close to one in five workers is employed, directly or indirectly, in the sector.

On Friday, Opel became the first European carmaker to turn to a government for help, asking for guarantees to finance its development and assembly facilities should GM stop supplying cash. The carmaker employs about 25,000 in its German plants in Ruesselsheim, Bochum, Kaiserslautern and Eisenach.

Other German carmakers are also suffering. Daimler said last month it would shut two big German plants for a month due to a sharp drop in demand.

Auto parts maker Robert Bosch GmbH said earlier this month it would shorten the working week for 3,500 workers at a plant in Germany for six months.

Shares in Volkswagen fell around 10 percent on Monday after the carmaker reported a 5.1 percent drop in group vehicle sales in October.

Separately, Renault’s chief operating officer Patrick Pelata told Le Parisien newspaper he expects the European automobile market to fall by around 20 percent in 2009.

(Reporting by Kerstin Gehmlich; Editing by Rupert Winchester)
By Paul Carrel and Kerstin Gehmlich

Source: Reuters

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