The Great Debate UK
–Guy Walsh is Regional Director at ABN AMRO Commercial Finance PLC. The opinion expressed are his own.–
The automotive industry is the UK’s largest sector in terms of exports, generating around £30 billion of annual revenue, but many smaller players in the sector languish due to a lack of funding.
Government officials, accustomed to dealing with large PLCs, have often failed to appreciate the particular needs of small and medium sized businesses (SMEs), especially with regard to issues such as tooling finance, which requires a considerable capital outlay at a time when many SMEs are struggling to maintain their cash flow.
from The Great Debate:
By Paul Ingrassia
The opinions expressed are his own.
History repeated itself this week, more or less. Back in 1983 Chrysler, recovering from virtual bankruptcy three years earlier, paid off $1.2 billion in government-guaranteed loans seven years before they were due. On Tuesday Chrysler, recovering from actual bankruptcy in 2009, repaid $7.6 billion in loans made directly by the U.S. government six years before the due date. Chrysler refinanced its debt with private money.
Who would have thought two years ago that Chrysler would survive longer than, say, Charlie Sheen on the airwaves or Osama bin Laden on the lam? American and Canadian taxpayers might not ever recover their full investment in Chrysler because the value of the stock that they bought in the company, and still own, remains uncertain. But the bailouts of Chrysler and General Motors helped prevent the Great Recession from becoming Great Depression II, and stand as President Barack Obama's only outright domestic-policy success to date.
Political and economic logic are set to collide in the byzantine decision-making over the future of German carmaker Opel, the main European arm of fallen U.S. auto giant General Motors.
If politics prevail, as seems likely, the cost to German taxpayers will be higher and the chances of commercial success lower.
The aim of the Berlin government and four federal states, which are sustaining Opel with bridging finance, is to save as many German jobs and production sites as possible. That makes political sense ahead of September's general election. But the business logic is that only a greatly slimmed-down Opel can survive in an industry with chronic overcapacity.
In theory, it is up to GM's board to choose among the three offers it expected to receive on Monday from Canadian-Austrian car parts maker Magna <MGa.TO>, Belgian financial investor RHJ <RJHI.BR>, and, less plausibly, Chinese state-owned auto maker BAIC. But there are several other powerful players with a say. They include the trustees responsible for the company since GM entered U.S. bankruptcy in June, the German federal and state governments, Opel's works council and, last but not least, the European Commission, which must approve the restructuring plan as a condition for authorising the state aid.