GM-Peugeot Deal Talks See Europe Move to Protect Jobs -- 2nd Update
February 17 2017 - 10:45AM
Dow Jones News
By William Boston in Berlin and Jenny Gross in London
European politicians and union leaders moved to protect jobs on
Friday, following this week's surprise announcement that General
Motors Co. was in advanced talks to sell its German Opel and
British Vauxhall units to French car maker Peugeot.
The deal, if completed, would create Europe's second-largest
auto maker by sales, helping Peugeot gain scale. The French car
maker has recently undergone a sweeping restructuring and
turnaround.
Governments and trade unions in France, Germany and the U.K.
fear it would slash jobs at unprofitable Opel and Vauxhall to cut
costs after an acquisition. German Chancellor Angela Merkel's
government this week formed a panel to review any deal.
"We will do everything that we can politically to keep jobs and
factories in Germany safe," Ms. Merkel said Friday.
German Economics Minister Brigitte Zypries plans to meet her
French counterpart in Paris on Thursday.
Germany's powerful IG Metall trade union, which sits on the
boards of the country's biggest manufacturing companies, pledged to
engage in "constructive talks" with Peugeot if it acquired Opel and
Vauxhall.
The deal could increase job security by transforming Peugeot
Citroën, Opel and Vauxhall into a single group that is second to
Volkswagen AG in Europe, the union said Friday.
"In principle, a combination with PSA is sensible," the head of
Opel, Karl-Thomas Neumann, said on Twitter. "We're doing everything
to make Opel sustainably successful."
GM in 2009 agreed to sell Opel to Canada's Magna International
Inc., but then rescinded the offer. It closed factories and tried
to nurse Opel back to profitability. IG Metall agreed to a plant
closure in exchange for guarantees on jobs, wages and investments
at Opel's remaining factories.
"We expect that all wage agreements will stay valid in [the]
case of an acquisition," IG Metall regional director, Jörg
Köhlinger, said. "All employees need this security."
Peugeot hasn't disclosed plans for Opel and Vauxhall, but
analysts expect the French car maker would cut costs by scrapping
redundant operations. "A combination would make strategic sense as
it could release substantial synergies and improve Peugeot's market
position in Europe," Moody's Investors Service said.
In the U.K., fears are running high that Vauxhall's factories
could be sacrificed by Peugeot to protect German and French Opel
jobs. In the wake of the June Brexit vote, many manufacturers are
considering whether to remain in the country anyway.
Leon McCluskey, general secretary of Britain's Unite trade
union, said he hadn't yet received the guarantees he wanted on
jobs.
"My immediate priority now is to understand where Peugeot is now
in this process, which is why I am contacting the CEO of the
company, Carlos Tavares, to request urgent talks," he said.
U.K. Business Secretary Greg Clark, who is seeking safeguards
for jobs, said Peugeot executives told him they valued the strength
of the Vauxhall brand on Thursday.
"While discussions are still ongoing, they made clear to me that
in any deal, these were strengths they would wish to build on," Mr.
Clark said.
A Peugeot spokesman declined to comment on any meetings with Mr.
Clark.
The talks on Vauxhall's future come at a sensitive time for the
British government, which may formally announce its exit from the
European Union in March. British Prime Minister Theresa May said in
January that the U.K. planned to leave the EU's single market and
it is unclear what that would mean for the U.K. auto industry,
which relies on trade with Europe and provides thousands of
manufacturing jobs.
In the wake of the referendum, global auto makers suggested they
would have to reassess U.K. investments, amid concerns about
potential tariffs, currency fluctuations and declining sales.
If no trade deal is struck between Britain and the EU,
manufacturers could be hit by the 10% tariff the bloc levies on
imported cars. Higher costs for car manufacturers could lead to job
losses.
Andrea Thomas
in Berlin and
Nick Kostov
in Paris contributed to this article.
Write to William Boston at william.boston@wsj.com and Jenny
Gross at jenny.gross@wsj.com
(END) Dow Jones Newswires
February 17, 2017 10:30 ET (15:30 GMT)
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