Unions at Vauxhall have expressed concern that a proposed merger between its parent company Peugeot PGA and Fiat Chrysler could lead to massive job losses.
The two European giants are planning to combine forces to create the world’s fourth largest car manufacturer.
However, Vauxhall, which has plants at Ellesmere Port and Luton fears they could be wiped out during the merger.
Vauxhall was purchased by Peugeot’s PSA group in March 2017 when the French firm obtained General Motors’ European arm which included the iconic British brand and German manufacturer Opel
There are fears among unions at Vauxhall that the proposed merger between Fiat and Peugeot could lead to massive job losses in the UK especially if Brexit makes manufacturing cars in Britain unprofitable
The Peugeot PSA group owns Vauxhall, who have 3,000 workers in Britain. Those jobs have faced an uncertain future as a result of Brexit with the possibility that the factories could move to Europe.
But the Unite union described the talks as ‘deeply unsettling’ for Vauxhall’s UK workers, including 1,100 at its Ellesmere Port plant in Cheshire, which has long faced closure.
PSA Group’s chief executive Carlos Tavares warned in June that it was prepared to pull the plug on the plant – which makes the Vauxhall Astra – if Brexit renders it unprofitable.
Unite said it would be seeking an ‘urgent, high-level meeting’ with PSA.
Unite national officer Des Quinn added: ‘Merger talks combined with Brexit uncertainty are deeply unsettling for Vauxhall’s UK workforce, which is one of the most efficient in Europe.
‘If PSA wants to use a great British brand like Vauxhall to sell cars and vans in the UK, then it has to make them here in the UK.’
Analysts have warned job cuts are likely.
The board of both companies are open to the deal which would give them combined annual sales of £146 billion with profits of almost £9.5bn.
The tie-up would leapfrog the carmakers into fourth largest in terms of sales behind Volkswagen, Renault-Nissan-Mitsubishi and Toyota, and would combine a host of well-known brands from Alfa Romeo, Jeep and Dodge to Citroen, Opel and Vauxhall.
The boards of both carmakers ‘share the conviction that there is compelling logic for a bold and decisive move that would create an industry leader,’ the companies said in a joint statement.
FCA is weaker in Europe than PSA, with its French and German mass market brands. The company also lags in bringing electric cars to market and investing in new forms of mobility.
PSA meanwhile is absent from the massive US market, where FCA sells the Chrysler, Jeep, Dodge and Ram brands.
A final agreement could be reached ‘in the coming weeks,’ according to the joint statement.
The merger would be achieved via the creation of a parent company in the Netherlands, with the shareholders of PSA and FCA each holding half the capital.
The Dutch-based parent company would have balanced representation, with FCA’s John Elkann as chairman and PSA’s Carlos Tavares as CEO.
While investors cheered when the automakers first confirmed their talks on Wednesday, on the markets Thursday the news had very different effects on the two companies’ shares.
PSA fell nearly 13 per cent, while Fiat Chrysler jumped more than 8.5 per cent despite the Italian-US firm posting third-quarter losses of £150m.
Daniel Larrouturou at asset management firm Dom Finance said the reaction of PSA shareholders was due to its market capitalisation being larger than Fiat Chrysler’s.
‘With a 50-50 merger, Peugeot is technically buying Fiat and offering a bonus to its shareholders,’ he said. ‘The market is taking this into account and consequently adapting the share price.’
While the companies said a definitive deal could be reached soon, a successful outcome is not guaranteed.
Fiat Chrysler tried to merge with PSA’s French rival Renault earlier this year, but the deal was scuppered in part by opposition from the French government, which owns stakes in both PSA and Renault.
For the moment, Paris has signalled its support for the new merger plan.
But Economy Minister Bruno Le Maire warned we ‘will remain particularly vigilant on the industrial footprint in France’.
Italian Prime Minister Giuseppe Conte said ‘the important thing is guaranteeing employment and investment levels’.
The carmakers said the £3bn in projected annual savings were calculated without any factory closures.
Patrick Michel, an FO trade union representative at a PSA plant in the eastern French town of Sochaux, welcomed the deal, saying it would put the French company ‘on the same level as the global giants Volkwagen and Toyota.’
Michel said he hoped it would lead to more work for PSA’s French sites, for example in producing cleaner engines for Fiat, which is struggling to meet EU emissions targets.
But others expressed fears for jobs with ‘workers pitted against each other,’ Jean-Pierre Mercier, a CGT delegate, warned.
IG Metall, which represents workers at Opel’s factories in Germany, noted PSA had guaranteed jobs there through to July 2023 when it took over the firm.
Unite, which represents workers at PSA-owned Vauxhall factories in Britain, said ‘merger talks combined with Brexit uncertainty is deeply unsettling for Vauxhall’s UK workforce, which is one of the most efficient in Europe.’
The merger plan comes as the auto manufacturing sector – which accounts for 5.7 percent of global GDP and eight percent of goods traded – shrank 1.7 percent last year by vehicles produced, according to the IMF.
A tie-up into a bigger firm would offer both companies advantages.
‘FCA could remain independent as could PSA but obviously they lack the scale of some of their competition,’ said Ian Fletcher, an automotive analyst at market research firm IHS Markit.