Yahoo Finance Vauxhall job fears rise as Peugeot boss mentions 'speedy' savings
The boss of PSA Group said the French carmaker’s proposed purchase of General Motors’ lossmaking European business could bring “speedy” savings, prompting fresh fears over job cuts at Vauxhall in the UK – just hours after speaking to Theresa May.
Carlos Tavares, the chief executive of PSA, which owns Peugeot, Citroën and DS, said on Thursday morning that adding GM’s German Opel and British Vauxhall brands would attract new customers and generate substantial cost savings. An outline agreement is expected to be announced as soon as next week, before the Geneva motor show starts on 6 March.
May had stressed the British government’s commitment to the UK car industry in a telephone conversation with the PSA executive on Wednesday evening.
Tavares said he wanted to create a new “European car champion” and pledged to work with national governments and unions worried about job losses. He is due to meet with the UK business secretary, Greg Clark, and Len McCluskey, the general secretary of Unite, Britain’s biggest union, in London on Friday.
However, Tavares also hinted that if the deal goes ahead he would carry out a major restructuring. At PSA, which came close to bankruptcy in 2014 but was saved by a state-backed bailout and Chinese investment, he has overseen a cost-cutting plan that involved a pay freeze, a factory closure and thousands of job cuts.
Tavares told analysts and reporters: “This company needs help. What we see today with the situation of Opel ... has a lot of similarities with what we were facing four years ago.”
Cost savings would be achieved through measures including using the same chassis across different brands, he said. “When you look at the product plan you see that you can in a quite speedy way implement quite significant synergies.”
Opel last reported a profit in 1999. Tavares said he would keep it as an independent division, as PSA hopes to benefit from the “halo effect” of German marques. “Not only can we bring a solution and help Opel turn itself around, but we want to keep this company German.”
He said he plans a global push for Opel cars, which are not sold outside western Europe at present. “There is significant complementarity in terms of customer consideration between the German Opel brand and our three French brands ... In some markets in the world we have customers who, despite all the progress that we’ve made, will not consider a French brand.”
A spokesman for the prime minister, commenting on May’s conversation with Tavares, said: “The prime minister and Mr Tavares discussed the importance the UK attaches to Vauxhall’s plants at Ellesmere Port and Luton and their shared desire to protect and promote the jobs it supports and what Mr Tavares referred to as the ‘iconic’ Vauxhall brand within the wider group.
“The prime minister reiterated the government’s commitment through our modern industrial strategy to creating and supporting the right conditions for the UK automotive industry to go from strength to strength, now and into the future. A particular shared goal was strengthening the UK’s automotive supply chain.”
McCluskey criticised May for not meeting Tavares, “as this would have been the opportunity for her to state that she will give UK plants the same, if not more, backing for the UK plants as the German and French leaders have given their workforces”.
PSA announced on Thursday it would resume dividend payments for the first time since 2011, after annual profits nearly doubled to €1.7bn from €899m in 2015, helped by cost cuts. Revenues were down 1.2%. The chief financial officer, Jean-Baptiste de Chatillon, said PSA took a “big hit” on currency volatility, especially in Britain after the Brexit vote sent the pound plunging against the euro.
The economy ministers of Germany and France were expected to discuss the deal at a meeting in Paris on Thursday. With France and Germany going to the polls in May and September respectively, jobs are a particularly sensitive issue. Opel has about 35,600 employees in Europe, including more than 18,250 in Germany.
PSA would become Europe’s second-biggest carmaker behind Volkswagen, with annual sales of 5m cars. Tavares said: “We believe there is an opportunity to create a European car champion, resulting from the combination of a French company and German company and without forgetting our UK friends.”
He said PSA would respect existing labour agreements but did not rule out job cuts. Tavares has spoken with the German chancellor, Angela Merkel, and met with Opel employee representatives since the takeover discussions were announced last week. “The best way ... is to have unions and governments on your side,” he said.
In the UK, the job guarantees mean the production of the current Vauxhall Astra at Ellesmere Port and the Vivaro van in Luton should be guaranteed until 2020, but the company would then decide where to produce the next generation vehicles.
Vauxhall’s Ellesmere Port and Luton plants, headquarters and warehouse employ about 4,600 people, with a further 20,000 working in the carmaker’s showrooms; a further 18,000 supply chain jobs depend on the carmaker. Vauxhall accounts for 14% of the UK car market.
McCluskey said: “A very concerning picture is emerging here ... Vauxhall workers and their union, Unite, have yet to be advised of General Motors’ plans, but I say again to both auto makers and the UK government we will not accept any threats to UK plants and jobs.
“I will be reinforcing this when I meet with Carlos Tavares, the Peugeot head, this Friday. I will be saying again to him that GM has a unique place in the UK’s marketplace, and that the company’s share of that market has never been higher, so do not mistreat loyal UK workers and customers.”
