Fears Britain’s exit from the EU could lead to cuts at Vauxhall after the buyout.
Fears Britain’s exit from the EU could lead to cuts at Vauxhall after the buyout.

PSA GM deal raises UK job loss fears

6 March 2017

French owners behind Peugeot and Citroen have confirmed a deal to buy General Motors’ (GM) lossmaking European division Opel and Vauxhall for £1.9bn.

The announcement, made by PSA Group at the Geneva motor show, ends weeks of speculation surrounding the deal and its potential impact on thousands of jobs at its plants in the UK.

According to the PSA, more than 19,000 of GM’s 38,000 workforce are based in Germany’s 12 factories, while Vauxhall employs around 4,600 people at its two plants in Ellesmere Port and Luton.

Labour MP Gavin Shuker, who represents Luton South, said he was glad to see uncertainty over the deal come to a close.

“Our UK plants are among the most efficient of any in the new company—they deserve a bright future,” he said.

“Now government needs to play its part, delivering a Brexit deal that keeps Vauxhall building in the UK.”

According to the Guardian, GM Europe has not made a profit since 1999. Speculation over the deal has raised fears over the long-term future of Vauxhall’s two UK plants, as Britain’s exit from the EU could mean tariffs being applied to cars made in Britain and sold in Europe.

Unions urged the UK government to seek assurances for British workers after PSA chief executive Carlos Tavares revealed he was looking to make “speedy savings” following talks with prime minister Theresa May.

GM and PSA said the deal would create annual savings in purchasing, manufacturing and research and development of £1.47bn a year by 2026, with most savings made by 2020.

Tavares, who has build a reputation as a cost cutter, sought to ally fears in a statement.

“We are confident that the Opel/Vauxhall turnaround will significantly accelerate with our support, while respecting the commitments made by GM to the Opel/Vauxhall employees,” he said. 

Confirmation of the move is expected to trigger a political wrangle between the UK, German and French governments to protect jobs and factories in their respective countries.

Christian Stadler, professor of strategic management at Warwick Business School said Britain’s impending exit from the EU would weaken its position as PSA look to cut costs.

“I would expect job cuts—PSA has done it before and there is no other way to realistically achieve the cost savings they have in mind, which might possibly mean plant closures aw well,” he said.

“The UK is definitely in a bad position as Brexit makes it less competitive than Germany and the unions are stronger in Germany.”

Len McCluskey, general secretary of Unite, told the Daily Telegraph the last few weeks of uncertainty had been “nerve wracking” for staff.

“While initial discussions with the PSA Group have been relatively positive, our priority now is to ensure a long-term future for our plants and the tens of thousands of workers depending on them,” he said.

Former Lib Dem business secretary Sir Vince Cable told the BBC he feared Britain’s exit from the EU could lead to cuts at Vauxhall.

“Car components have to go backwards and forwards across frontiers and they will acquire tariffs and checks,” he said.

“Vauxhall is particularly exposed to this, [as] about 80% of its exports are to the European Union.

“I imagine there will be some ferocious German canvassing and it’s difficult to see what Britain can offer other than years of uncertainty.”

The deal is expected to close towards the end of this year and needs approval from anti-trust authorities. 

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