GM Generali

BERLIN (AFP)--The collapse of struggling General Motors' (GM) unit Opel could cost German taxpayers up to EUR3 billion and it would be better to rescue it instead, Germany's finance minster said Sunday.

If 25,000 workers at Opel and a similar number at supplier firms lost their jobs, there would be a high price to pay in terms of unemployment benefits and loss of tax revenue, Peer Steinbruck told ARD television.

"Would it not be more logical to provide aid (to the company) so that these people can continue to earn their living?" he asked.

Opel, like its parent company and peers elsewhere, has seen its sales devastated by the worst global economic slump in decades while Washington has given billions of dollars to its parent GM to help it survive the crisis.

GM's restructure plans, however, are radical, including the sale of many of its overseas operations, dropping brands and cutting thousands of jobs.

Steinbruck said it was up to Opel to take the measures it felt necessary first before state aid could be considered.

"I want firstly to see a restructuring plan for the company... to see what steps they are prepared to take before thinking whether, as a last resort, the government should come to their aid," he added.

New Economy Minister Karl-Theodor zu Guttenberg said in remarks published earlier Sunday he would lobby for Washington to rescue struggling Opel.

Zu Guttenberg told Bild am Sonntag newspaper he had established an informal U.S.-German working group with U.S. Treasury Secretary Timothy Geithner and he would use a March visit to hold more meetings with key officials.

"It is indispensable that General Motors and Opel consider rapidly... how they want to keep jobs in an economically healthy way," he said.

Reports say Opel needs more than EUR3.3 billion ($4.2 billion) in public loan guarantees - nearly double the figure previously expected.

Meanwhile, the head of auto components firm Schaeffler, which last year borrowed heavily to take over its larger rival Continental, said current circumstances meant it had no option but to ask for state aid.

"To ask for money from the state is the last thing that a boss would want to do but their responsibility towards the company and its employees does not leave us any choice," Maria-Elisabeth Schaeffler told the Bild Sunday edition.