GM's Opel U-turn sparks anger, job fears in Europe

General Motors' shock decision to pull out of a sale of its Opel/Vauxhall unit triggered outrage from the German government yesterday and fresh uncertainty for the automaker's 55,000 European workers.

German Chancellor Angela Merkel had offered €4.5 billion to sweeten the sale to Canada's Magna and Russia's Sberbank in an effort to save as many German jobs as possible.

Economy Minister Rainer Bruederle said the decision not to finalise a preliminary deal hammered out in September was "totally unacceptable", while the IG Metall union vowed protests across Germany yesterday.

"A company that needs 12 months to realise that its own subsidiary is capable of surviving and six months to decide whether it should be married off has already disqualified itself from being a responsible employer," said Armin Schild, from the union's Frankfurt branch.

Mrs Merkel, ahead of elections on September 27, had lobbied hard for GM to sell to Magna, believing that the Canadian firm offered the best chance of Opel's 25,000 German workers keeping their jobs.

In a terse overnight statement, Mrs Merkel's spokesman, Ulrich Wilhelm, said Berlin wanted GM, majority owned by the US government since emerging from bankruptcy earlier this year, to pay back a €1.5 billion loan made earlier this year.

The loan expires at the end of the month. Germany had also offered Magna, which together with state-owned Sberbank was due to buy a 55-per cent stake in Opel, €3 billion in state loan guarantees.

With Germany's tactics over recent months ruffling feathers in other European countries where Opel has factories, reaction from other governments to GM's move was more muted.

Germany had been in negotiations with other European countries to assume some of the state aid package, but the talks were bogged down because of fears that taxpayers' money would primarily save German jobs.

European Union regulators in Brussels had been examining the deal to determine whether Germany had been in breach of competition rules by making clear that its aid was only available to Magna and not to other buyers.

The British government, which had made no secret of its dislike of the Magna deal when it was first announced, said it would "work closely with GM to understand their plan for the business and what it means for the UK".

British union Unite was delighted, however, welcoming an "incredible turnaround" for Vauxhall's 4,700 workers.

"It is the best decision for Britain and our plants. I am absolutely delighted that General Motors has finally done the right thing for them and for us," Unite general secretary Tony Woodley told the BBC.

But with GM saying it was planning a €3 billion restructuring plan for its European business, it was clear that even with Magna out of the picture, large numbers of jobs were still set to go.