GM CEO Barra meets with Opel over job cut concerns

Christoph Rauwald, Rainer Buergin and Birgit Jennen
Bloomberg News

General Motors Co. Chief Executive Officer Mary Barra flew to Germany to alleviate concerns her proposal to sell Opel to PSA Group could lead to job cuts as possible headwinds against the deal began forming in Europe.

Barra and GM President Dan Ammann on Wednesday met with managers at Opel’s headquarters in Russelsheim, one day after Bloomberg broke the news that the marque might be sold to PSA, the maker of Peugeot and Citroen cars. Political and labor leaders in Germany and the U.K., where the Vauxhall sister brand is based, vowed to protect workers.

“The company carries responsibility for the sites, the development center and securing employment,” German Economy Minister Brigitte Zypries, a Social Democrat, said in an e-mailed statement to Bloomberg. “This is my clear expectation regarding General Motors.”

The warning from Chancellor Angela Merkel’s government is a sign of the pitfalls faced by GM and PSA at a time of political turmoil in the European Union, including the U.K.’s negotiation of post-Brexit economic ties with the bloc,a chaotic French presidential election with a nationalist groundswell for Marine Le Pen and Merkel’s own bid for a fourth term against a resurgent Social Democratic Party. At stake are scores of jobs. PSA employs 184,000 workers, while Opel has 34,500 employees, with nearly half of them in Germany.

A combination would create a manufacturer with about 16 percent of the European car market, pushing past Renault SA to become the region’s second-biggest auto group after Volkswagen AG. The effort is likely to center on finding ways to cut costs — and ultimately jobs — because the two have overlapping product offerings.

“I assume that in discussions with Peugeot the chancellor will insist on the importance of keeping jobs primarily in Germany,” Franz Josef Jung, a lawmaker from Merkel’s Christian Democrats whose constituency is home to Opel’s headquarters, said in an interview. Jung previously under Merkel ran the defense and labor ministries.

Peugeot shares dropped as much as 3.1 percent on Wednesday and traded 2.5 percent lower at 18.23 euros as of 12:58 p.m. in Frankfurt. GM closed 4.8 percent higher in New York on Tuesday.

Factories threatened

The state of Hesse, where Opel is based, said employees must get swift clarity about the future of production sites. Hesse Prime Minister Volker Bouffier said he’ll seek talks with company management, with a view to securing jobs and keeping Opel’s development center — “the core, the most important part of Opel” — in Ruesselsheim, outside Frankfurt.

“Almost all experts say that with this deal now being prepared between the large French, almost state-owned conglomerate and Opel, that especially the German Opel plants may be on the losing side,” Rainer Einenkel — former works council chief at Opel’s Bochum plant, which was shut down — said on Deutschlandfunk radio. “You have to assume that the German plants are under acute threat.”

British union Unite is “disappointed and angry” with how the potential deal emerged, General Secretary Len McCluskey told reporters in London after meeting with the U.K. authorities.

“Peugeot will of course have a significant French government involvement, so it’s important that our government is involved,” and the union won’t support the loss of “a single job” as a result of a deal, McCluskey said.

PSA CEO Carlos Tavares will meet with Opel’s unions “quickly” to discuss the ongoing talks with GM, a spokesman for the French carmaker said, adding that Tavares also plans to meet with Merkel. The company declined to provide a timeline for the discussions.

A Peugeot union representative expressed support for deeper cooperation between the two automakers and said he wasn’t surprised by the talks. The French manufacturer’s unions aren’t concerned about job losses at the automaker because PSA signed a deal last year that includes employment guarantees, CFE-CGC union representative Jacques Mazzolini said by phone.