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PSA has 'little choice but to close Vauxhall plants' if buyout goes ahead

Vauxhall Ellesmere Port

Vauxhall plants in the UK would be losers in any deal for PSA Group to acquire Opel/Vauxhall from General Motors.

PSA revealed on Wednesday it was in talks with GM.

John Colley, a professor of practice at Warwick Business School and an expert on mega-mergers, said: "Carlos Tavares, chief executive of Peugeot Citroen, has little choice but to close the UK Vauxhall plants at Ellesmere Port and Luton to make the Opel acquisition work.

"The cost of closing the high-cost German plants will be at least triple that of the UK plants.

“Not only will they have to placate the powerful German unions who have right of deal veto, but redundancy costs are around three times the level of the UK.

"Additionally the German Government is supporting the unions in an attempt to retain employment.

“Brexit will also be a source of uncertainty which Tavares could do without.

“Government promises such as that given to Nissan are worth little in the long run.

“Governments tend to be transitory and not always disposed to keeping promises.

"Opel/Vauxhall needs a major dose of cost cutting which is the mark of Tavares.

“He will also need to develop and launch new models to revitalise the business if he is to prevent the continuing decline in European market share. Eastern Europe has the benefit of lower labour costs and being closer to demand. Brexit may start paying the price."

Unite

Trade union Unite has already said it “will not accept any job losses” if the sale goes ahead.

Len McCluskey, the union’s general secretary, also reiterated his call for the UK government to think again on its policy towards the European single market as the uncertainty is now clearly impacting on the future of flagship UK companies such as Vauxhall.

He said: “This union will not accept any job losses or plant closures as a result of this move by GM and Peugeot.

“The UK market is largest market in the EU for Vauxhall/Opel so GM does have a moral obligation not to turn its back on the communities and workers who have helped make this company what it is today.

“I’ll be speaking to GM as a matter of urgency to find out exactly what its plans are in relation to the UK workforce, and to impress upon the company that the unions must be part of this process going forward. So too with Peugeot – I want to talk to them to assess whether they are a realistic option for our automotive sector’s future or not.

“It does seem as if Brexit is a factor in GM’s thinking as its UK business relies heavily on its links throughout the EU supply chain. Without a shadow of doubt, UK car plants must be offered the same assurances as those given by government to Nissan.

“The Government’s commitment to delivering its industrial strategy, plus the uncertainty caused by Brexit, means we need to see bold, decisive action from ministers now.

“It cannot be that the future of UK car workers’ jobs now lie in the hands of the French government and their backing for Peugeot. The UK government has to offer at least equal but actually better backing for UK workers.”
 



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Comments

  • David - 16/02/2017 15:00

    An alternative thought is that the UK plants would be an assett to PSA should the UK Brexit negotiations go well with world trading to give them a strong route into the Global market outside the EU!!

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  • Iceage - 16/02/2017 22:32

    Also the end of the Vauxhall name...... no bad thing for a busted flush

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