GM Pullout from Opel Deal: Austrian Reaction Low-Key,

UNCLAS VIENNA 001453 SIPDIS E.O. 12958: N/A TAGS: EIND ECON AU SUBJECT: GM Pullout from Opel Deal: Austrian Reaction Low-Key, Constructive REF: (A) Vienna 700; (B) Vienna 1069 ¶1. Austrian stakeholders took on board last week's surprise announcement by General Motors (GM) that it would not sell its European subsidiary Opel/Vauxhall to the Magna/Sberbank consortium. Local experts and GoA politicians feel confident on the main Austrian concern -- securing "GM Powertrain" with its 1,800 jobs at the Aspern (Vienna) engine/transmission plant -- arguing that GM will need Aspern engines however it restructures European operations. OFFICIAL REACTIONS - - - - - - - - - ¶2. Economic Minister Reinhold Mitterlehner has emphasized in media interviews that GoA loan guarantees of "up to EUR 200 million" are available to GM -- as they were to Magna -- if GM needs funding for its Aspern facility. He expects GM plans for Opel to be similar to Magna's, ensuring Aspern's "medium-term" viability. Mitterlehner added that the events surrounding the failed takeover were "very unsatisfying for the involved governments." If GM's restructuring fails, Opel could be "split up into pieces" -- but Aspern engine/transmissions are "a valuable asset for any company in the automotive sector." ¶3. Chancellor Werner Faymann predicted "a good future" for the Vienna-based GM plant, but said he would discuss the issue with his German and Russian counterparts during visits the week of Nov. 9. A spokesman for Faymann also said that the Chancellor "would approach GM management" on the Aspern plant issue. NOTE: There was no/no media coverage of Faymann having discussed the issue either in Berlin or in Moscow. BUSINESS SECTOR ALSO FAIRLY UPBEAT ON GM - - - - - - - - - - - - - - - - - - - - - ¶4. GM Powertrain's employee organization voiced disappointment over the failed takeover by Magna, but ruled out any protests or strikes "at this stage." A "solidarity contribution" wage reduction of EUR 10.6 million annually for Opel workers in Vienna -- which had been negotiated with Magna -- is likely to remain. ¶5. Opel dealer association head Helmut Guenther said he expects no falloff in Opel car sales and opined that Opel's ownership structure is "unimportant" for sales as long as consumers see the brand as producing cars which are "discernible as German and European" vehicles. MAGNA: NO TIME FOR HARD FEELINGS - - - - - - - - - - - - - - - - - ¶6. In press reactions, Magna Europe CEO Siegfried Wolf (an Austrian national and the "right-hand" of Austro-Canadian Magna founder Frank Stronach) expressed "understanding" for GM's decision. Wolf told senior Austrian journalists it was hard to swallow GM's pullout after working for eight months, "but in our business we do not have time to be offended." He opined that GM kept Opel in order to retain its identity as a multinational company with a large stake in Europe. COMMENT - - - - ¶7. Policymakers and industry representatives in Austria have hinted at a "silver lining" for Magna Europe, which can now need to focus again on its ailing core business. Magna's flagship vehicle assembly business "Magna Steyr" in Austria forecasts a production decline of 50% in 2009 (62% for the first three quarters). Currently, Magna's worldwide profits stem solely from its business in the U.S and Canada, while the European sector is in the red. As many have noted, a Magna takeover of Opel would have been a further drain on Magna's supplier business -- a bullet that Magna has now dodged. EACHO