A powerful German labor leader poured scorn on the idea of a bid from Fiat for struggling German car maker Opel, saying he favored an investor such as Canadian car-part maker Magna.
Opel's future hangs in the balance as its owner General Motors and the German government search frantically for an investor or buyer for the group. Trade union opposition could throw a spanner in the works.
Speaking on German television, Armin Schild, a senior labor leader and Opel supervisory board member, warned against a deal with Fiat.
“We have experience of working with Fiat - this experience has been extraordinarily bad,” said Schild, referring to an alliance between Fiat and General Motors which ended acrimoniously in 2005.
“Why should that be better just a few years later?”
“I expect that the guarantees of the German taxpayer would be used to reduce the overcapacity of Fiat,” he added, flagging Magna as a more attractive candidate for labor.
Fiat and Magna emerged on Thursday as possible suitors for Opel, which hard-pressed GM is spinning off with other European operations into a separate company.
Late on Thursday, German Economy Minister Karl-Theodor zu Guttenberg said little had been presented in terms of a formal proposal from potential investors.
“So far, all we have is rudimentary facts,” he said. “We should first wait to see what these interested parties put on the table.”
Juergen Ruettgers, the state premier of North Rhine-Westphalia which hosts an Opel plant, told Reuters no options should be ruled out at this stage.
“I think it is completely wrong to talk down an idea in advance only to see later that we are making no progress,” he said.
Fiat is also in partnership talks with another troubled US group, Chrysler LLC.
The Italian company faces an April 30 deadline to win the support of Chrysler's creditors and unions, and some analysts have said it could turn to GM to gain the scale it needs to survive the worst industry crisis in decades.
GM needs to sell a big stake in Opel to get €3.3 billion ($4.35 billion) in loan guarantees from European governments that Opel say it needs to tide it over.
Five months before a federal election, the German government is likely to welcome any option that avoids mass layoffs at Opel, which employs about 25,000 people in Germany. However, a deal with Fiat would be likely to entail job cuts as well. (Reuters)