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WORLD> Europe
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Fallout from auto slump spells pain for Germany
(Agencies)
Updated: 2008-12-12 17:09 The European Commission has warned Germany and France against subsidising the car industry, and Berlin is keen to avoid moves that would spark demands for aid from other sectors.
"If you support the big car-makers today, tomorrow you will support the big furniture-makers, the big building firms. You get a never-ending story," said analyst Dudenhoeffer. Instead of supporting car-makers, he said the government should provide 5 billion euros ($6.35 billion) in credit for auto parts suppliers over the next two years to help these generally healthy firms through the near-term cash squeeze. Cash Crunch Joerg Riehle, chief executive of auto supplier ORIS, said he wasn't looking for subsidies but he was facing a cash crunch. "I have customers who are closing factories over Christmas and New Year for four weeks or more. That means no sales for me. So you can already see how much will come in in January: basically nothing. But I still have to pay people," he said. Daimler, BMW and Volkswagen have all either cut or are considering cutting output, and Volkswagen said on Tuesday it is now seeking state guarantees for its financial service units. ORIS, which employs 660 people, makes components for companies such as Opel, Ford, BMW and Mercedes-Benz. "Demand in the market is going down and on top of this our customers, because they are running short of cash, are trying now to minimise their stocks," said Riehle. "(The government) should help to mobilise money," he added. "Otherwise, if you can't pay anymore, then all the things that come after that come very quickly." Economy Minister Michael Glos is aware of the problem. This month he said banks were not lending as the economy needs them to, and insurers were making it worse. "It's as if someone started collecting all the umbrellas ahead of a heavy downfall," he said. |
