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GM Keeps Opel; Toyota Leaves F-1; Fed Keeps Rates Same

Aired November 4, 2009 - 14:00:00   ET


ADRIAN FINIGHAN, CNN INTERNATIONAL ANCHOR: A massive U-turn, General Motors decides to keep Opel for itself.

An uphill struggle, Fiat's CEO tries to kick-start Chrysler.

And tears at Toyota, Formula One becomes a luxury it can no longer afford.

Hello, I'm Adrian Finighan, in for Richard Quest, this is QUEST MEANS BUSINESS.

A very good evening to you. Well, we thought it was a done deal, but tonight, GM has abandoned the sale of its European arm Opel to Magna. Germany is furious. Spain is confused. Britain is welcoming the decision. We'll take a look at why GM has decided to keep GM Europe and what it means for workers across the continent.

Well, the German government says that it regrets GM's decision. Chancellor Angela Merkel and other leaders worked for months to try to get this deal to go through. You'll remember that the government also loaned GM more than $2 billion to keep Opel afloat.

Well, ministers say they want the money back. CNN's Fred Pleitgen is standing by with reaction on the decision from Germany. But first, let's go to Maggie Lake in New York to talk more about this eleventh hour U-turn.

Why has GM done it, Maggie?

MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT: Well, boy, Adrian, we keep hearing that the new GM, and I guess they mean it when they say that because everyone here shocked by the decision as well that seemed to come out of nowhere.

And there are a couple of things that people are talking about. GM itself clearly said, listen, we're in more stable financial shape. You know, they're not having a fire sale. They're a little bit more stable so they can take a step back.

A lot of people pointing to the fact that GM probably very reluctant to lose its foothold in Europe. Some saying they probably didn't want to sell the unit in the first place, but they were just so desperate that they planned to. Europe is a big market. It's very slow right now. But if you're going to be a major global player, you would imagine that you have to have a presence there.

Secondly, also a lot of attention on the fact that Opel is -- specializes in small compact cars, and a lot of people continue to see that as the future. We've got a little bit of an ease in energy prices over the last year or so, but people expect them to go up again. And analysts here do say it would be a hole in GM's portfolio. They've shuddered some brands here that had a couple of small cars in it. So they really do need that. And Opel does provide that to them.

Another interesting, less popular theory that I head from an analyst I just talked to, he is saying he is a bit befuddled by it. He still thinks GM needs the cash more than it needs its asset. But now that the sort of crisis that -- that really intense crisis feeling is over, they have a little breathing room, maybe they're going to take a step back, regroup, and market it once again for a higher price.

Now that is not the general feeling over here, but it's certainly one of the theories put out there by people -- Adrian.

FINIGHAN: He is not the only one who is befuddled by the decision, either, Maggie. I mean, GM has upset a lot of people, particularly in government, in both Germany and in Russia. It still needs the help of European politicians. Has it shot itself in the foot here?

LAKE: This is a question everyone asking, and why so many people are surprised by this. One analyst said, listen, it's a game of chicken and it appears -- the speculation is that GM feels like it has less to lose than these governments do. Clearly the governments in these countries very concerned about the loss of jobs.

GM is coming from a perspective where it has been slashing, burning, restructuring in an incredibly massive way. It's in that mode right now. So even though it's likely to have angry partners, it may be betting -- it seems to be betting that they're still going to play and be at the table with them, although the mood will be a lot icier.

But it's a risk, certainly. I'm very interested to hear what Fred has to say about what the government position is on that. And just for a little bit of background, Adrian, you know, when GM went through the restructuring with the auto task force here. A lot of people said that you had to break with the past.

You needed to think strategically, be a sharp business, make those tough decisions, and one of the reasons the old CEO got booted out was because he was not bold in that way that they wanted to see. Well, they've got new management in there, in the terms -- Fritz Henderson, and they clearly seem to be living up to the bar that was set for them.

Another interesting thing is, remember, GM is majority-owned by the U.S. government. So the intertwine -- interplay between politics and government here will be very interesting. The analysts speculating with me, you know, are the governments in Europe going to get on the phone with the government here in the U.S. and say, what's going on?

Unlikely there will be a response. But you know, we're in a whole new era now.

FINIGHAN: Well, let's bring in Fred, in Berlin for some reaction. Thanks, Maggie. I think it's fairly safe to say there is steam coming out of people's ears there in Berlin tonight.

Fred, before we talk to you, let's hear from the new government's economic minister speaking about GM today.


RAINER BRUEDERLE, GERMAN ECONOMIC MINISTER (through translator): We have a completely new situation here. From today's point of view, the further development of Opel is (INAUDIBLE), the legal situation is clear. General Motors has until November 30th to pay back the credit.

GM has to do it without a special demand of the German government.


FINIGHAN: So, Fred, no understatement, people are pretty cross there in Germany, aren't they?

FREDERIK PLEITGEN, CNN INTERNATIONAL CORRESPONDENT: Yes, and you know, alluding to what Maggie just said, yes, the German government does say it plans to call the White House and plans to call the Treasury Department as well and ask them what in the world is going on here.

Now the German government indeed is very angry at what happened. And you know, the economy minister there just vented his anger. He said that it's completely unacceptable, what GM, quote, "did to the German government."

And as he said, the German government does want those $2.2 billion in loans that they've already given to General Motors Europe to just keep that company afloat until right now, they want that money back by the end of this month.

So certainly that is something that's going to be very difficult. But there is anger, of course, on the one hand, from the German government, but there is a lot of anger also from Opel employees and from the workers unions there. They plan actions tomorrow, protests at German Opel plants.

And they say it's going to be a walkout of about two to three hours to protest what is going on. They say they believe with General Motors keeping this company and a possible General Motors restructuring plan, they believe that this will mean more job cuts in Germany.

They say they believe this could mean plant closures, not only Germany, but also in Belgium. And also they believe -- and this is a very, very important point, also going back to what Maggie said, they believe that General Motors America might try to drain some of that research and development of those small vehicles from Germany and relocate that to America.

They say they believe it's a very dangerous situation. And one thing that they were very clear on, and I talked to the head of the workers council here in Germany, and he said, we are not going to take a single cent in pay cut in a GM restructuring plan -- Adrian.

FINIGHAN: Yes, Fred, it's odd when you look at the difference in reaction here in the U.K. to that in Germany. Just remind us why that is. It's because the unions there in Germany had sown up a deal with Magna, it sought assurances and the government that there would be no plant closures under Magna ownership.

PLEITGEN: Well, you're absolutely right. You know, here in Germany, for the German government, and of course, also for the unions here, it's all about keeping jobs and it's all about not closing plants. And in order to assure that under the Magna deal, the workers councils here in Germany have agreed to massive pay cuts already in the form of over a billion dollars already.

They've also agreed to other things like taking less vacation time, not getting Christmas money, all of these things. And you know, some of these things have already been paid out. Some of these things have already benefited General Motors in Europe here.

And the unions are now saying they want that money back. They want the Christmas money they didn't get this year. They want a pay rise they were supposed to get in May, which they never got. They want that money from General Motors. And they're going to try and get it -- Adrian.

FINIGHAN: All right. Fred, many thanks, indeed. I'm just hearing while you're talking there that CNN has confirmed that GM officials have confirmed that they're cutting 10,000 jobs at Opel. Was that right? Was that what you said? At Opel in Europe, that news just in to us here.

Well, GM employs nearly 55,000 people in Europe. And as we heard from Fred, the majority of those workers are indeed in Germany. More than 25,000, that's where Opel's Corsa is put together. And if you drive an Astra or a Zafira, then it's a good chance that was produced in Germany too.

Now down in Spain, GM employs more than 7,000 people. Unions say that workers there will try to negotiate a deal with GM as they had indeed with Magna. And in Britain, there are around 5,000 staff across two sites turning out cars and vans with the Vauxhall badge.

In Sweden, GM employs nearly 4,000. Of course, they own Saab. A Saab spokesman told Dow Jones that GM remains committed to selling Saab to Sweden's luxury car-maker Koenigsegg. And, of course, there is a payroll of nearly 1,500 in France.

What I'm trying to show you here is just what a huge operation we're talking about. GM people work in more than 20 European countries, even more than we can show you here. We have reports from both Britain and Spain on this amazing development today coming up here on QUEST MEANS BUSINESS.

Now, let's get to the markets. European stock markets rose sharply this Wednesday, a batch of upbeat earnings reports boosted optimism. Take a look at where London's FTSE closed. It was up 1.4 percent. High Street retailer Marks & Spencer, one of the biggest gainers today, it was up 6 percent, flat first-half profits it announced today, but they beat forecasts.

Miners lifted the index too, metal prices were up today. Xstrata, the miner, up around 6 percent. Over to Frankfurt, where Xetra DAX closed up 1.7 percent. Banks leading the way. Commerzbank, one of the biggest gainers there, up over 4 percent. Adidas was up 3.7 percent. Adidas net income fell 30 percent in quarter three. But they were cautiously optimistic with their future outlook. We had the CEO on CNN earlier today.

And Paris, the CAC 40 rapped up the session at 2 percent higher, over 2.5 percent -- over 2 percent, nearly 2.5 percent higher. Getting my maths in a twist. Banks in France had a pretty good day. Societe Generale, Credit Agricole, both up 4 percent today, over 4 percent. Renault, one of the top gainers. And it led the gainers among the autos in France after Nissan narrowed its four-year loss forecast.

Now as far as U.S. markets are concerned, we're treading water to a certain extent ahead of the Fed, the FOMC decision on interest rates. And right now, the market is up. You can see it on the screen in just a moment. I thought it was going to be on the wall behind me, but no, there it is. It's up 113 points right now at 9,884.

We'll bring you that Fed decision on the future direction of U.S. rates, will they raise? Unlikely. Will they fall again? Well, they can't get any lower. Will they stay the same? That's probably what is going to happen. Whatever does happen, we'll tell you right here on QUEST MEANS BUSINESS.

Few, busy show today. Let's get you up-to-date with what else is happening in the world right now. Max Foster joins us live from the London newsroom.


A verdict in the first ever trial of the CIA's extraordinary rendition program. An Italian court convicted two dozen Americans in absentia, most thought to be CIA agents in connection with 2003 kidnapping of an Egyptian terror suspect in Milan. Charges were dismissed against the man thought to be the CIA's chief of station at the time as well as the head of Italian security services for state secrecy reasons.

On the 30th anniversary of the seizure of the U.S. embassy in Tehran, demonstrators clashed with riot police and Basij militia in renewed anti- government protests, while nearby, tens of thousands shouted "death to America" in a state-sponsored ceremony outside the former embassy.

A judge in the U.S. state of Ohio has denied bond for a convicted rapist-turned-suspected serial killer. Anthony Sowell is charged with murder, rape, assault, and kidnapping. Investigators have found 10 bodies inside and outside his home since last Thursday. The county coroner is expected to hold a news conference later today, revealing the preliminary causes of death.

Those are the headlines, Adrian. Back to you.

FINIGHAN: Max, many thanks, indeed.

Now tears at Toyota today as its Formula One dream comes to an end. We'll tell you why the Japanese automaker is out of the race at least for the moment.


ARSENE WENGER, MANAGER, ARSENAL FC: A manager is always under pressure to buy. Why? Because to buy reassures people. But we have a different view.


FINIGHAN: And the Gunners' boss tells CNN that he is keeping his wallet zipped up. Our chat with Arsene Wenger as his boys get ready for their next Champion's League clash, which kicks off in North London in about 30 minutes from now.


FINIGHAN: So Toyota is quitting Formula One, the world's largest car- maker is pulling out to save money. It says it has run head-on into the current and economic realities of the sport. Well, times are tough at Toyota, the last financial year was pretty bad. It made a net loss of $8.5 billion, and there is no real sign of improvement, at least in the near future.

Toyota will post earnings for the April to September period this Thursday, and they're expected to be the worst results in the company's history. The car-maker at first came into F-1 in 2002. But it never won a grand prix. Here's how Toyota's president and CEO broke the news that Toyota was giving up.


AKIO TOYODA, PRES. & REPRESENTATIVE DIR., TOYOTA (through translator): Today we are announcing the news about F-1. We have been participating in the F-1 race since 2001 for eight years. After discussing through in the board meetings, we have decided to end participation to this year's race.


FINIGHAN: Well, for Toyota's team leader, the decision was obviously pretty tough. At the press conference, he was visibly upset. And Toyota's departure is just the latest in a series of body blows to Formula One. It's also a symptom of wider malaise affecting Japanese companies. Japan depends, of course, upon its exports and a lot of firms have been hurt by falling global demand, and a higher yen.

Just take a look at this, Honda quit Formula One back in December because of worsening economic conditions. Now no Japanese constructors are left in the sport. Kawasaki quit MotoGP, the motorcycling racing circuit, Subaru and Suzuki no longer are in the World Rally Championship. Mitsubishi pulling out of the Dakar Rally, all of them cited economic concerns.

And Bridgestone, F-1's tire supplier, not renewing its contract, it's to finish at the end of the 2010 season. I'm sorry, I'm just looking, why have we got VW up here? It's going to redirect its resources elsewhere.

I asked CNN's Justin Armsden, who was, of course, covering the race for us in Abu Dhabi, the last one of the season at the weekend, I asked him what Toyota's exit means for the sport and the business of Formula One.


JUSTIN ARMSDEN, CNN INTERNATIONAL CORRESPONDENT: Well, it's a pretty heavy blow when you consider right here, Adrian, in Abu Dhabi a few days ago, it was the crowning glory on a remarkable Formula One season. Everyone was excited about the Abu Dhabi track. And it has been a real dose of reality about the troubles that have faced the economies around the world with Toyota pulling out.

And that's on the back of Bridgestone, the tire-maker, announcing that they're not going to supply Formula One anymore as well.

And it comes off the back of the fact that BMW and Honda have already decided to pull out of Formula One. And that means that three major car- makers in motorsport's marquee championship won't be involved in it next year. So it's a pretty heavy blow.

And those announcements all came in the last 11 months.

FINIGHAN: Yes, what's going on with Japanese motor manufacturers, Justin? I mean, it's not just F-1 that they're pulling out of, it's motorsport in general.

ARMSDEN: Yes, exactly. Subaru and Suzuki have pulled out of the World Rally Championship. Kawazaki out of A1GP, and also the fact that there won't be on the Formula One calendar a race in Japan next year as well. And as I said, Bridgestone pulling out, it looks like Japan has decided to sever pretty much all its ties with motorsport.

It's a rather interesting comfortable change that's going on at the moment, isn't it? And I think they're all hemorrhaging because of these problems and just keeping everything in-house and deciding that it's just not really worth investing, you know, multi-millions of dollars that are involved in supporting these motorsport teams.

FINIGHAN: It speaks volumes, I suppose, of the Japanese economy right now, the Japanese manufacturers are pulling out of motorsport. Motorsport, though, isn't on its last legs. It's a blow for the FIA president, Jean Todt, of course. These are challenging times for him.

But there is money coming into the sport. Where is the new blood, the new money coming from?

ARMSDEN: Yes, exactly. If we want to talk about, you know, these three big car-makers pulling out of Formula One, let's put it into perspective because Lotus, which has got historical ties to Formula One, is joining the championship next year. And they haven't been involved since 1994. So you lose three but you also get another big team coming back.

And that's what seems to happen over the years in Formula One, car- makers come and go and so -- and the other good point to remember is that when Honda pulled out, it was bought privately by Ross Brawn and some other private investors. And they went on and won the championship this year.

So even though the big car-makers pull out, it leaves other opportunities to smaller teams like Brawn GP to surprise everybody and win the championship.

FINIGHAN: So, all right, then so it is a challenge for F-1, a financial challenge. But it's not the end of the world. F-1 isn't on its last legs.

ARMSDEN: Oh, definitely not, if you can roll through the controversy that we saw this year, Adrian, where it basically surfaced that they fixed a race or Renault were involved in fixing a race in Singapore, if you can move through that, then you can certainly move through losing three big car-makers in the last 11 months.

And please remember that the four new teams that come in will be getting some sort of hand from Formula One management. They get a $10 million bonus for joining it. So it's not all bad. This sport has moved on through rougher times than this.


FINIGHAN: That was Justin Armsden, speaking from Abu Dhabi a little earlier. I'm just getting word that we have an interest rate decision out of the U.S. The Fed says that it is keeping rates as they are, as we expected, for, quote, "an extended period."

Of course, it's not just what the Fed does, it's what it says about what its doing that is important. We'll be deconstructing that statement with an expert in the next few minutes here on QUEST MEANS BUSINESS.

In the meantime, let's get back to sports. And another furious contest is about to begin, this time in the Champion's League, a tournament which generated a billion dollars in revenue last year, we're now what, a little less than 25 minutes away from kickoff in Arsenal's match against Holland's Alkmaar, and CNN's Alex Thomas is live outside Arsenal's Emirates Stadium here in London.

And it's a big night tonight, Alex, for the Gunners. But earlier today, you got to speak to the boss, Arsene Wenger.

ALEX THOMAS, CNN INTERNATIONAL CORRESPONDENT: Well, I did, Adrian. I got to speak to (INAUDIBLE) towards the end of last week. But we've released it today on this night -- Wednesday night match. It's halfway through the Champion's League group stages, the noise building in the Emirates Stadium behind me here, Adrian, because Arsenal, if they win against AZ Alkmaar, the Dutch club, this evening could well book their place in the knockout stages of this competition for the seventh season running.

Testament to what Arsene Wenger has done with this club. He joined them in the mid-1990s. He is Arsenal's longest-serving manager, set a new record a couple of weeks ago, celebrated his 60th birthday a couple of weeks ago as well. And as I said, we're lucky enough to get some words with him and ask him how he did it.

You know, this is someone that started out as a teenager organizing and coaching matches for free, he was so into football, success in France, Japan, and notably here in England. And when I spoke to him, he told me that -- he almost agreed with me when I said he would do it for nothing.


WENGER: I always say I have luck to be in a job that is -- and a privilege to be well-paid. But I've shown that I worked in it already when it was not well-paid at all. And it didn't change my commitment and it didn't change the way I lived on a daily basis. And the evolution has brought the money -- the evolution of the sport has brought the money into our sport. But at the start it was a normal job.

THOMAS: Yes, and being a well-paid manager in the richest league in the world is maybe a product, presumably, of being at the top of your game, of being the best manager you can be.

WENGER: That's what everybody does in this job. You know, you try to be as good as you can, and you can always argue, is it too much or not enough. You can understand that. But people feeling (ph) our job, it's maybe sometimes too much. But it's just a consequence of the audience we have and the consequence of television support, of responses, and of the gates (ph) we get.


THOMAS: And you know, it's fascinating being in Mr. Wenger's company if you're at all a football fan, Adrian. But he has really worked a financial miracle, keeping Arsenal up with their better resourced rivals, the likes of Chelsea, Liverpool, and Manchester United in England's Premier League. And certainly keeping their wage (INAUDIBLE) down as much as possible by promoting as much as possible by promoting youngsters from their marvelous academy system.

A real success story for them and they're hoping to gain another victory here at the Emirates Stadium this evening.

FINIGHAN: All right. Alex, great to talk to you. Many thanks indeed. Alex Thomas, live at the Emirates Stadium in North London. I go past the Emirates Stadium every night on my way home on the train.

That breaking news from the Fed once again, the Fed keeping rates as expected on hold, but for, quote, "an extended period." We'll get analysis from one of our economic experts in just a moment here on QUEST MEANS BUSINESS. Stay with us.


FINIGHAN: All right. So back to that interest rate decision that we've had from the U.S. Federal Reserve in the last few minutes. Rates are staying on hold for, quote, "an extended period." Peter Morici from the University of Maryland is here to add some flesh to the bones of that statement.

Peter, was that the right decision, do you think?

PETER MORICI, UNIVERSITY OF MARYLAND: Well, as far as it goes, yes, the Fed is indicating that it expects economic activity to remain fragile for an extended period of time. It's going to keep interest rates low for a long period of time. But it also indicated it still plans to withdraw support from the housing market that is its purchases of longer-term mortgage-backed securities by the first quarter of next year.

I think there it's going to disappoint itself. I think it's going to find that it's going to have to extend that support a little further than the first quarter.

FINIGHAN: Given that the economy has resumed growth, the figures that we've gotten on GDP in the third quarter, it seems that they're not too worried about inflation at the moment?

MORICI: Well, most economists did not view that 3.5 percent as a legitimate 3.5 percent, because so much of that was "Cash for Clunkers," the tax credit for first-time home-buyers, and a slower rate of inventory liquidation. Most economists see a rather a tepid rate of growth for the next two quarters, in the range of 2 to 2.5 percent.

That's not a lot, it's not enough to bring unemployment down. As a consequence, inflation is no tangible threat, except from oil, which is offshore, can't do anything about that anyway.

FINIGHAN: It was a pretty straightforward statement. You can't quibble with what they said. They're going to remain -- interest rates will stay where they are for an extended period. There was no sort of wiggle room there. There was nothing that could allow them to change their language in the near-term.

MORICI: The Fed does not like to change its language, and it didn't from last time, unless it sees a change in the circumstances that warrant a change in the expectations of investors. Basically it was treading water in this statement. It was continuing on the course established six weeks ago.

FINIGHAN: Two more questions I want to put to you, Peter. First of all, is the wording of the statement itself, as I said before the break here, it's not so much what the Fed does, it's what it says about what it's doing and why. Just how tricky is the wording of that statement?

They don't want to say anything that could endanger the recovery, do they?

MORICI: No, they don't. And gone are the wordings from last summer that were more or less "whatever it takes" to a wide range of tools. But the Fed is expressing a lot of confidence that the housing market is looking up more or less permanently.

We've had a lot of good numbers in the housing market, prices have been rising for several months. Existing home sales have increased, forget about those new homes that got the first-time buyer subsidy.

And their view is that the housing market will return to normal in 2010, not at the high prices we had three years ago, but that housing prices have stabilized, they've begun to rise again, people are buying again.

And that is returning to a more normal market condition.

FINIGHAN: All right. So the housing market is up. We've already established that we think the third quarter GDP was artificially generated. To what extent now does the future of interest rates, Peter, depend upon the labor market?

MORICI: Oh, I think it does quite a bit, as long as the labor market is what it is, that is, unemployment at 10 percent or higher, which is expected, I think the Fed is going to be very reluctant to tighten. You know, the Fed is always faced with a tradeoff between inflation and unemployment, but right now, that trade-off would be particularly poignant.

You know, unemployment at 10 percent is just too high for the Fed to risk the political consequences of higher interest rates. At the end of the day, the Fed is a creation of Congress. Its independence is only as far as the Congress will let it go. So I think they're going to be very cautious about tightening with unemployment at or above 10 percent.

And also, inflation is not much of a threat with unemployment at that level.

FINIGHAN: Peter, it's always a joy to talk to you. You cut straight through the clutter. It's -- you make it very easy to understand. Many thanks, indeed. Peter Morici, from the University of Maryland.

MORICI: We'll see you again.

FINIGHAN: Yes, see you, Peter.

Now mapping out the future. Chrysler is back on the road with a whole new set of wheels. More when we return on QUEST MEANS BUSINESS.


FINIGHAN: Hello again live from London's West End.


I'm Adrian Finighan in for Richard Quest.

Now, General Motors' decision to scarp the sale of Opel is raising new questions about the future of thousands of workers. But while unions in Germany are fuming over the U-turn, as we heard earlier from Fred, some here in Britain are feeling cautiously optimistic, as Jim Boulden explains.


JIM BOULDEN, CNN CORRESPONDENT (voice-over): The Vauxhall brand may be the much smaller sibling of Opel, but it is a 100-year-old iconic brand and in a country still in recession, confirmation that General Motors will keep and invest in this loss-making (ph) European arm and not sell a majority stake to Magna cheered employees at Vauxhall's lone car plant in Ellesmere Port.

UNIDENTIFIED MALE: (INAUDIBLE) I think. But it's -- I'm not really sure in Israel. So please (INAUDIBLE).

UNIDENTIFIED MALE: Back to the devil, you know. (INAUDIBLE) General Motors (INAUDIBLE).

BOULDEN: There were worries here that Magna would preserve Opel jobs in Germany, where Opel got a $2 billion bridging loan, while cutting many of the 5,500 Vauxhall jobs in the UK. That fear was shared in Poland, Spain and Belgium, which all have Opel plants, as well.

The British Union cautiously welcomed G.M.'s decision.

JOHN FEATHERSTONE, UNITE UNION: I don't know whether it will be improved greatly, because I don't know what their plans are. Actually, they haven't decided they want to keep car building in Europe -- selling cars in Europe. It's a big market. Hopefully, they'll invest in Ellesmere Port and in the U.K. in general.

BOULDEN: Britain's business secretary, Peter Mandelson, has been in talks with G.M. for months. He was pleasantly surprised by G.M.'s decision and says though G.M. will be looking for some state aid to help Vauxhall, keeping Vauxhall should save U.K. taxpayers money when compared to the Magna plans.

PETER MANDELSON, BRITISH BUSINESS SECRETARY: It would have involved significantly more public expense, investment and underwriting by the governments than will be the case with G.M. retaining their company's -- the Vauxhall and -- and Opel within their own ranks. So it should be a better outcome. But there's a lot of discussion yet to be had.

BOULDEN: Mandelson says he will talk with G.M. executives immediately in order to gauge their plans for Vauxhall.

Observers are keen to see where G.M. Which is still struggling, gets the money to invest in Europe.

HOWARD WHEELDON, BGC PARTNERS: Well, G.M. itself isn't going to get cash, of course, because it isn't going to get it from its U.S. firm. So it -- the alternative and the only alternative available to it in the short to medium term is that it will have to seek government support.

BOULDEN: (on camera): So, G.M. is back in the driving seat. But that doesn't change the fact that Europeans are buying far fewer autos now than they were just two years ago. And any temporary blip in sales was because of government incentives.

So analysts say expect deep cuts by G.M. Europe in production.

But where?

Jim Boulden, CNN, London.


FINIGHAN: Well, as we told you earlier, G.M. has thousands of employees right across Europe. We've heard from Germany and the UK. Now let's hear from Spain, where feelings are very different, as Al Goodman tells us from Madrid.


AL GOODMAN, CNN MADRID BUREAU CHIEF: Unions at Spain's Opel plant, one of the largest in Europe, just called off their planned strikes after the would-be owner of Magna reduced its proposed job cuts in Spain and offered long-term guarantees.

Now that General Motors has decided not to sell Opel after all, Spanish unions tell CNN they're not going to walk out on Thursday, like German Opel unions, in protest, but clearly everyone here has been caught off guard.

JUAN JOSE ARCEIZ, OPEL SPAIN UNIONE PRESIDENT (through translator): We are right back at the start, because we need to wait for G.M.'s new plan for Europe. Once we get that, the unions can respond to actual proposals.

ANA SANCHEZ, OPEL SPAIN UNIONE OFFICIAL (through translator): The situation has caused a great deal of mistrust because it changes the negotiations. G.M. should put forward a plan that convinces our unions here and guarantees a future for this factory.

GOODMAN: The Opel plant in Zaragoza, Spain has 7,000 employees making small cars, delivery trucks and minivans. The Spanish government struck a deal about the factory with Magna and now Madrid is worried.

MIGUEL SEBASTIAN, SPANISH INDUSTRY MINISTER (through translator): Let's not go back to square one. We will talk with G.M., but for us, the deal we already made with Magna is the base. We won't take less than that.

GOODMAN: The leader of a major Spanish trade union says the German government's deal with Magna, apparently to save German Opel jobs, may have backfired.

CANDIDO MENDEZ, UGT UNION LEADER (through translator): What happened here was the German government got involved but got hung out to dry. Nationalistic approaches in situations like this sometimes are useless, even counter-productive.

GOODMAN: So after months of uncertainty for Spain's Opel plant, leaders here warn there is still more uncertainty to come.

Al Goodman, CNN, Madrid.


FINIGHAN: Well, amidst all this brouhaha over G.M. Let's not forget that today is a big day for another one of Detroit's big three, Chrysler. It's announcing a new business plan today to get the automaker back on track. And we'll get the view, hopefully, from a Chrysler dealer in -- in Washington in a while.

But first, let's talk to's Poppy Harlow, who joins us live from New York.

And -- and what are we hearing today then -- Poppy?

POPPY HARLOW, ANCHOR, CNNMONEY.COM: You know, Adrian, what's going on right now is about a six hour call with Chrysler, on with reporters, investors. This all coming out of Chrysler headquarters in Auburn Hills, Michigan.

The Italian automaker, Fiat, which everyone knows now owns a controlling minority stake in Chrysler, is today rolling out part of their new lineup.

What we've heard of from them in the short-term is a strategy to make current products, what they already have, better, by redesigning the interiors, improving the suspension, etc.

One big announcement, 11 of those Dodge products that you know right now, they will either be all new or significantly redesigned by 2014. So a few years away still.

The Dodge Viper -- remember this car?

That's going away next year. It's going to be dropped, apparently not making enough money for the company. They expect to replace it with something new in 2012. We don't know what that is yet. And, also, the Jeep Patriot; also, the Jeep Compass. Those are two Chrysler vehicles that will go away, again, Adrian, in 2012.

What they will be replaced by in this country, in the U.S. is by Fiat- based products expected to come in 2013.

So as you can tell, some of those new products, the Fiat products replacing Chrysler, it's going to be a number of years -- three, four, five years -- before we see those -- Adrian.

FINIGHAN: Poppy, G.M. appears to have turned a corner.

Are these plans that we're hearing about today...


FINIGHAN: ...that are trickling out from -- from Chrysler, going to be enough to save it?

HARLOW: Well, that's the question on everyone's mind here. I mean the U.S. taxpayer, Adrian, is about $13 billion in the hole to this company through the TARP program. The CEO of Fiat says things are improving. He says they had a break even operating performance report in September.

Analysts say this is just a race against time. And here's why. Let's show you the numbers here. When you look at the sales last month, it pales in comparison -- look at G.M. and Ford sales were up 5 and 3 percent, respectively. Chrysler sales were down 30 percent.

The same story is true when you look at market share. Compare Chrysler's market share in October with that of Ford and General Motors and you see a similar story there. Chrysler just at 7.9 percent market share here in the United States.

With those falling sales and the falling market share, what analysts are saying is Chrysler's product development is hurting. They don't have the money coming in to work on those new products that some argue they need. They need more midsized sedans, analysts say, more crossovers to compete. And again, as I said, they're still $13 billion in the hole to U.S. taxpayers. And the Treasury Department here, I said it doesn't have any plans at this time, to give them more aid.

So it's an ongoing call. We're getting more developments. They're updating it right there on for you.

But that's the latest -- a big day, certainly, for one of the big three automakers in the United States and for its new owner, Fiat -- Adrian.


Poppy, many thanks, indeed.

Read all about it on

Poppy Harlow live in New York.

Now, we'll be talking to a Chrysler dealer in the next few minutes here on QUEST MEANS BUSINESS. But imagine the financial order that you're living in now that you lived in completely disappeared. We'll take a look at how businesses in East Germany coped with the collapse of communism. That's also coming up right here on QUEST MEANS BUSINESS.


FINIGHAN: More now on Chrysler. Their dealers are on the edge of their seats, waiting for -- for details of this five year game plan that we were talking with Poppy about just before the break.

It's been a tough year, of course, for those on the front line, with sales tumbling, car model shortages and managers coming and going at the top.

For more on how dealers themselves have been affected, we're joined now by Tamara Darvish, vice president of the DARCARS Automotive Group.

She joins us live now from -- from Washington.

Tamara, great to have you with us here on QUEST MEANS BUSINESS.

We were hearing from Poppy Harlow just before the break -- you -- you probably wouldn't have heard that conversation. But we were hearing about Fiat's plans perhaps to discontinue some of the Chrysler models.

I want to know, as dealers, have you been involved or consulted in -- in these plans and what do you think about -- about Chrysler discontinuing some models and perhaps selling their Fiat-based models?

TAMARA DARVISH, VICE PRESIDENT, DARCARS AUTOMOBILE GROUP: Well, you know, today is the very first day even the dealers have heard anything about the plan. And, you know, with scheduling, I -- I was able to get in on the Web cast for a little over half of the presentation so far today. And not one mention had been made of the dealer network or the connection with the dealer network.

So I -- I think that the Fiat executives are going to have to understand that in the United States, things are a little bit different in that the dealers are going to have to be moved to be a big priority for the carmaker for them to survive.

FINIGHAN: So do you think that that's -- that's just a learning exercise, that they've got to go through something -- that there's a difference in the way that they do business in Europe to the way that -- that business is done in the United States?

I mean do you have confidence in -- in -- in the chief executive?

DARVISH: Well, sure. I mean I think the chief executive has been very well established in Europe. But Europe is a completely different market than the United States of America. You know, for example, some of the marketing tactics used in Europe would never be acceptable in -- in the United States. And, you know, it's -- like their basic advertising and things like that. So, you know, we're a lot more regulated here, a lot more conservative.

FINIGHAN: All right. So let's talk about -- about car sales.

It's been a tough year for you, hasn't it?

I mean what difference did the Cash for Clunkers program make to you as dealers?

Did you notice any difference?

And have sales improved or -- or -- or retreated again since that -- that program came to an end?

DARVISH: Well, I think sales have obviously retreated since that program came to an end. But, you know, the Cash for Clunkers program, I think, depends upon how you define was it a success or not.

I can tell you that my organization did about 1,700 transactions under that program, of which almost 84 percent of those transactions, those customers came in and bought import vehicles -- Toyotas, Nissans, Kias, Volvos, Volkswagens. And -- and over 80 percent of them traded in a Detroit domestic vehicle -- a Chrysler, Ford or General Motors product.

And General Motors, Chrysler and Ford are going to have a terrible time trying to regain that market share a few years down the road when those -- that trade cycle kicks in.

FINIGHAN: Absolutely.

Tamara, I -- we -- I know it's tough right now. Fingers crossed that the business landscape improves for you in -- in the coming months.

Many thanks, indeed.

DARVISH: Thank you.

FINIGHAN: Tamara Darvish, the vice president of DARCARS Automotive Group.

Now, the Berlin Wall came down 20 years ago this week. It signaled the fall of communism here in Europe and the reunification of Germany.

CNN's Fred Pleitgen takes a look now at how businesses coped in a new Germany. As he discovered, it wasn't that easy turning old communist companies into capitalist ones.


FREDERICK PLEITGEN, CNN CORRESPONDENT (voice-over): Precision lens crafting at Carl Zeiss in Jena, Eastern Germany. The optics company was divided into an eastern wing and a western wing after World War II.

DIETER KURZ, CEO, CARL ZEISS: Those companies were fighting with each other in the cold war about the brand -- who is the real owner and the right owner of the brand?

And after the reunification, it was clear that we had to do something here in the east.

PLEITGEN: The company reunited after German political unification. But there were problems. Like so many other companies in communist East Germany, Seiss was employing way too many people to be profitable -- 27,000 at the time the companies merged.

KURZ: It was very painful for the people here, because the -- the final decision was we could take 3,000 people out of the 27,000.

PLEITGEN: Twenty years on, Jena is one of the most successful towns in what used to be the communist East.

(on camera): Jena's unemployment rate is lower than in most West German cities. It's a prime example of positive economic development in the East. However, Jena remains an exception and most places in the East still lag far behind.

(voice-over): Thousands of East German companies were forced to shut down after unification. The inefficient factories simply couldn't compete internationally. Millions lost their jobs and the problems persist to this day.

LARS HENDRIK ROELLER, ESMT, BERLIN: There are some daunting issues ahead. We're still lagging behind both in GDP. Unemployment numbers are higher and, of course, we continue having major transfers from West Germany to East Germany.

PLEITGEN: The result -- more and more young people are turning their backs on the East. Some towns are in danger of dying out and some researchers have even proposed turning much of Eastern Germany into a nature reserve.

RAINER KLINGHOLZ, GERMAN INSTITUTE FOR POPULATION AND RESEARCH: Many areas that have been populated are experiencing a loss -- a dramatic loss of population. And we will see, Europe wise, many regions that will be without people in -- in the future, because people tend to go to the cities.

PLEITGEN: The town of Jena, however, is growing, thanks, in part, to Carl Seiss, which also supports the local university. After 20 years and a lot of pain, the folks here say they have finally achieved unity.

Frederik Pleitgen, CNN, Jena, Germany.


FINIGHAN: Right. High time we got up to date with what's happening weather-wise on QUEST MEANS BUSINESS.

We've got some -- we've had a program of breaking news tonight.

Ivan Cabrera is at the CNN International Weather Center tonight with - - with yet more breaking news, this time to do with some seismic activity out in the Atlantic -- Ivan.

IVAN CABRERO, CNN METEOROLOGIST: Adrian, you're absolutely right. Of course, we cover meteorology here at CNN and also seismology. And we're just getting word -- I don't have that much information, but we are getting word of a 6.0 earthquake near the Azores Island.

As far as the depth, about 10 kilometers. This occurring just minutes ago and we'll keep you posted as far as the information, as we get more from the U.S. Geological Service there. A 6.0 earthquake, 10 kilometers deep by the Azores Islands. We'll keep you posted on that.

I want to focus, though, now on something we haven't been focusing on over the last, really, it seems, months. The Atlantic hurricane season has been relatively quiet. Well, at last minute here. As you know, it goes through the end of November. But we do have a disturbance in the South or West Caribbean here. And this could become our next tropical depression -- our next tropical storm. In fact, if that happens, it will be named Ida.

Here's the latest from the National Hurricane Center. It is moving west-northwest at 11 kilometers per hour. It's not really all that well organized, but it is going to be bringing heavy rains to Nicaragua and eventually Honduras over the next 12 to 24 hours; potentially some flooding rains for then.

And we'll continue with the tropical theme, because we have a disturbance. This is not a depression. It's just an area of low pressure that has brought significant rainfalls. Now we're taking it to the Bay of Campeche, 250 millimeters in Vera Cruz, significant flooding ongoing there.

Now the other side of the Atlantic, where we have busy weather conditions. You see here an intense low. We've been covering that through last week and here it continues to pump in some significant rains to the British Isles and also some cooler weather, as well.

And then another low moving through Turkey with not only heavy rain, but severe weather potential there. Look at the radar presentation here across the British Isles. I mean you want to keep the umbrellas handy, really, over the next several days, as we continue to see the rain continuously coming in from the Atlantic.

As far as our accumulation map, it certainly could be picking up, upwards of -- well, as far as the snowfall in the Swiss Alps, up to 25 centimeters, potentially. London will be seeing cloudy skies with showers over the next several days.

QUEST MEANS BUSINESS continues after the break right here on CNN.


FINIGHAN: Welcome back.

Now, here on QUEST MEANS BUSINESS, we believe that the financial is also personal. That's why we're interested in your World At Work.

Tonight, we're looking at a woman in a man's world. We're going to meet Yanet Moreno, who's a female baseball umpire in Cuba.


UNIDENTIFIED FEMALE: (voice-over): Yanet Moreno is an umpire -- the only woman to step on the field during Cuba's national series.

YANET MORENO, CUBAN UMPIRE (through translator): I was born liking baseball. I played baseball with the kids in the street and my father punished me because he said it was for boys, not for girls. So I played secretly.

Those of us who work with men should never stop being feminine. We have to keep painting our nails, fixing our hair, plucking our eyebrows -- never stop being women. It's a tradition of mine to put on perfume right before I go onto the field.

The umps can't get emotional about the place. They have to have a cool head and concentrate on the (INAUDIBLE).

I try to always maintain a distance between player and umpire, because the umpire can't always have a lot of familiarity with a coach and a player.

You have to have a little bit of physical preparation, otherwise you'll get exhausted quickly.

UNIDENTIFIED FEMALE: Her advice for other women who want to break into the field?

MORENO (through translator): My first advice is to avoid familiarity with the players, but never stop being polite. That's the main thing. The other thing is try to find a family within the group of umpires that you work with, because you spend a lot of time without going home, so they are your family.


FINIGHAN: Fascinating.

If you want us follow you and your world of work, then, for goodness sake, get in touch with us here at QUEST MEANS BUSINESS.

All that's left for us to do on this, the midweek edition of the show, is to update you on what's happening right now on the markets and what happened here in Europe and in Asia. We'll do right back -- we'll do that, rather, right after the break.

Stay with us.


FINIGHAN: Another story that crossed our news radar just -- just as we were coming on air tonight, Chip maker Intel is accused of conducting a systematic global campaign of illegal conduct. New York's attorney general, Andrew Cuomo, is suing the tech giant. He accuses it of threatening computer makers and of paying kickbacks -- all allegedly in order to get unfair advantage over competitors.

He says that Intel has used its market prowess to "rule with an iron fist." Intel denies all of the charges.

Let's remind you of what happened on the market. We got that decision on interest rates. They're staying the same for the foreseeable future, says the FOMC today. Markets like what they hear.

Also today, news that orders in the service industries rose today. The market up about 1.75 percent right now, up 133 points higher, at 9904.

And here in Europe, we had a pretty good day, too. The markets were up.

That is it for the Wednesday edition of QUEST MEANS BUSINESS in London.

I'm Adrian Finighan.

Whatever you're up to in the hours ahead, as Richard himself would say, I do hope it's profitable.

Christiane Amanpour is next up here on CNN.

And that's right after the headlines, which we'll get from Hala at the I Desk.