REFILE-SCENARIOS-Opel,unions vie for upper hand in restructuring

(Changes dateline to Frankfurt, not Paris, with no other
changes to the text)

FRANKFURT, Feb 5 (BestGrowthStock) – Opel, the European arm of
General Motors [GM.UL], is arm-wrestling with workers over a
revamp plan, with labour accusing managers of sneaking in extra
job cuts as they race to get the plan signed off before cash
runs out.

Opel wants 2.7 billion euros ($3.7 billion) in state aid for
the restructuring from countries which host its plants.

An independent audit of the business due next week marks a
step towards securing financing. But without the support of
influential labour representatives Opel may struggle to win
approval — and cash — for its plan. Workers’ refusal to
cooperate could have drastic consequences for the carmaker.

Here are some possible scenarios:

DEAL: MANAGEMENT, WORKERS AGREE BY MID-FEBRUARY

Opel CEO Nick Reilly wants a deal by mid-February, a target
that is looking more elusive. After GM announced it would close
its Antwerp plant in Belgium, labour withdrew its offer to save
265 million euros in annual costs in the next five years.

If an accord does emerge in the coming days, the way is
clear for governments of countries with Opel plants to set out
their contributions to the restructuring.

Germany accounts for more than half of Opel’s 50,000 strong
workforce, and GM’s proposal for job cuts across Europe reflects
this. An Opel spokesman said this week that 4,000 out of a total
8,300 job cuts would be in Germany, although labour leaders
argue the total is now much higher.

While the restructuring plan may look like a bitter pill,
workers would be well advised to swallow it, argued IHS Global
Insight analyst Tim Urquhart.

“They have got about 20-30 percent more capacity than they
actually need, and that’s what Reilly is trying to address. They
can either get on and help that process and swallow some of the
pain, or destroy the entire business,” he said.

“At the moment it looks like they are going to try and
destroy the entire business,” he said.

NO DEAL: FINANCING IN DOUBT

Opel’s decision to close Antwerp has made negotiations with
the European works council fraught, but failure to reach a deal
could have serious consequences.

The carmaker says it has money to keep operating “well into
the second quarter” but governments want the plan signed off
before they commit taxpayer cash.

British Business Secretary Peter Mandelson said on Friday
that European governments could consider some support if the
carmaker presented them with a business plan. [ID:nLDE6140QO]

“The government can only help if this total concept is
presented. To pay just because announcements have been made —
that will not work,” said auto expert Willi Diez of Germany’s
Institute for the Automotive Industry, referring to the broad
outlines of the plan Opel has already made public.

GM has said restructuring Opel will cost 3.3 billion euros
but experts estimate it needs double that to cover the costs of
developing its next new models.

“That is the crux of the matter. How do we secure our
financing? And it is by far not secured,” said a person familiar
with the restructuring plan.

Opel’s labour leaders have considerable clout with the
German government, and ministers have already cast doubt on
state aid for Opel, criticising GM’s plan.

“It would be unpopular if the government aids Opel,” said
car expert Wolfgang Meinig, head of Automotive Industry Research
in Bamberg.

Tempers are already frayed after GM backtracked on months of
fraught negotiations to sell Opel, opting last year to keep it
instead. Politicians in Berlin and in states where Opel has
factories felt they were taken for a ride.

“The government is just livid at GM because of Opel,” auto
expert Stefan Bratzel of the Centre of Automotive in Bergisch
Gladbach University.

GM may have to stump up more cash itself if it wants to make
Opel profitable.

NO DEAL: GERMANY’S INFLUENCE WANES

If German unions continue to block the plan and the
government refuses aid, other Opel countries — Britain, Spain
and Poland — could seize the opportunity to make their voices
heard, pledging cash and cooperation and taking on more
influence in the talks. “It’s a bit of an extreme scenario, but
it is possible,” said IHS Global Insight’s Urquhart.

NO DEAL: LIMBO CONTINUES

Opel’s fate has been hanging in the balance for over a year,
and Opel employees won’t give in easily to GM’s demands.

“We will push through with our plans,” a union
representative said. “We should not lose our nerve. There will
be no contributions from the workers until we have a clear
solution on certain points.”

NO DEAL: OPEL WORKERS SUFFER EVEN MORE

Workers’ determination to resist GM’s restructuring efforts
should not blind them to what Reilly has referred to as the “new
reality” of the European car market, analyst Urquhart said.

“There has to be a rationale, the business has to make
money. If Opel workers can’t sort themselves out then there may
be a greater restructuring, or they may be shut down.”

Opel, like the rest of the European auto industry is stuck
in a “Catch-22” situation, Urquhart said.

“They’ve got a stark choice. They can work with management
to create a viable future for the company or they can drag the
company down into the mire.”

Investing

(Editing by David Cowell)
(Reporting by Angelika Gruber and Jan Schwartz; Writing by
Marilyn Gerlach and Helen Massy-Beresford)
($1 = 0.7292 euro)

REFILE-SCENARIOS-Opel,unions vie for upper hand in restructuring