Solar Company Makes Offer for GM Division Opel

GM Dismissive but Desperate

SolarWorld, Germany’s third largest manufacturer of photovoltaic systems, has offered to take the General Motors (GM) Opel division off their hands for a cool 1 billion euros.  As GM officially dismissed the offer, Jerome York who advises billionaire and former GM board member Kirk Kerkorian, told Bloomberg News that the nation’s largest automaker has weeks rather than months before the company’s cash runs out.

The classic Opel GT sportscar. Photo courtesy of GM

GM would have to give the solar energy company its four German factories, the Russelsheim research center, the Opel brand and a compensation payment of 40,000 euros for each German job, totaling 1 billion euros.   It’s difficult to see how GM would benefit from such a deal, and most believe the offer will be rejected.  However, with prospects running short for the automaker giant, this probably isn’t the last of the discussions either.

The SolarWorld Group said in a press release their plan is to make the venerable Opel brand that first began manufacturing cars in 1929 “the first  ‘green’ European automotive group.”  They will further develop current successful models while creating a new line of energy-efficient vehicles that include hybrid and extended-range electric drive models that combine electric motors and combustion engines.  Opel is already working on systems for electric drive vehicles like the highly promoted “Volt.”

At the same time that GM leadership is going to Congress with hat in hand asking for at least $25 billion in rescue funds for all three of the major automakers in the U.S., the Opel division has been forced to ask the German government for about $1.25 billion in aid.  However, some analysts believe GM alone may need as much as $22 billion just to remain a sustainable - not profitable - company. 

Despite the desperate conditions, a GM spokesman told AFP late yesterday that the Opel brand is “so integrated into GM’s global operations, we would not or could not sell them. Opel is not for sale.”

Meanwhile, Congress put the brakes on any further discussion about an automaker bailout today by requiring the “Big Three” to submit detailed viability plans to lawmakers by December 2.  Congress will reconvene during the week of December 8 to discuss the submitted plans. 

Majority Leader Nancy Pelosi (D-CA) who has been supportive of a deal to rescue automakers said, “Until we can see a plan where the auto industry is held accountable and a plan for viability on how they go into the future … we cannot show them the money,” according to a report in Reuters.

The article shifts into “blogotorial” mode from here forward.

GM has not run its ship well, and just like families who find themselves in hard times, they must be prepared to sell off all assets and raise funds by any means necessary before expecting others to bail them out.  While auto executives are quite fond of pointing fingers at lowly assembly workers and saying they make too much money or get too many benefits, they never, ever look at the multi-millionaire leaders who created SUVs just to get around a few pollution requirements.  I can’t help but wonder where the economics of that wise decision ended up on the balance sheets.

Worse still, this is the second time automakers have been in trouble for failing to have a diverse enough product line to account for days when gasoline prices may cause a titanic shift in consumer preferences.  Fool me once, shame on you; fool me twice, shame on me.  How such foolhardy leadership deserves compensation as high as theirs is unfathomable.  But if their expectation is that this will continue, the assumption comes awfully close to the divine right of kings manifesto. 

Any plan GM, Ford and Chrysler submit to Congress must include an asset sell-off.  It may hurt them in the future, but they have to survive today, and they can’t expect average Americans who are losing their homes to finance a return to business as usual.  Otherwise, our children will be bailing them out again in a few years. 

The Opel deal isn’t a good one as it stands now.  However, it can be and should be explored and made more favorable.  The government would do well to facilitate discussions and to coordinate with the German government who is looking at a bailout of their own.  

There’s a deal to be struck here.  Do it. 

What are your thoughts?