Word: opels
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When Karl-Theodor zu Guttenberg jets into Washington this Sunday he plans on asking some tough questions. Germany's new Economy Minister is due to meet U.S. Treasury Secretary Timothy Geithner and bosses at embattled American carmaker General Motors. Opel, a Germany-based division of GM, is fast running out of cash and GM and Opel bosses recently went cap in hand to Berlin to ask for $4.25 billion in state aid. In return, GM say they will restructure Opel by cutting costs and loosening the company's ties with the parent company in Detroit. Opel would become an autonomous...
...After meeting GM executives in Germany on March 6th, Zu Guttenberg said there were still "many questions that need to be cleared up." A few days later he suggested that insolvency might be a better solution for Opel than a state bailout. (See pictures...
...cost-cutting plans have terrified Opel's 26,000 workers in Germany. Over the past month, rumors of mass layoffs and plant closures have been swirling in the German media. Union leaders are clamoring for a quick decision on the bailout. But Chancellor Angela Merkel's government wants guarantees that any cash that it doles out will not flow back to GM's embattled operations in the U.S., or go down the drain if GM goes bust. (Read a TIME story on Germany's auto industry...
...ourselves, we're in the middle of a tough crisis, but we've now got a very good stimulus plan," Zu Guttenberg told Germany's Bild newspaper recently. "We expect the economy will pick up this autumn, at the very latest." The next few days will decide whether Opel will be part of that resurgence...
...Even when it works, a scrapping scheme won't guarantee that the money will go to domestic carmakers. In Germany, sales of the Volkswagen Polo and Opel Corsa have been boosted by the government's initiative, but a surge in orders for Italy's Fiat and Renault of France means "two-thirds of the additional sales are imported cars," says Ferdinand Dudenhöffer, an auto-industry expert at the University of Duisburg-Essen. "And most of the German cars which are booming are at least partly produced elsewhere...