Final hours! Save up to 55% OFF InvestingProCLAIM SALE

European labor unions fret about jobs in Fiat Chrysler-PSA deal

Published 10/31/2019, 11:28 AM
Updated 10/31/2019, 11:31 AM
European labor unions fret about jobs in Fiat Chrysler-PSA deal
STLAM
-
PEUP
-
RENA
-

PARIS/MILAN (Reuters) - European labor unions have called on Peugeot owner PSA and Fiat Chrysler to avoid job cuts and factory closures as the two major carmakers prepare to tie the knot, underscoring worries about the $50 billion deal as the regional economy falters.

As PSA (PA:PEUP) and Fiat Chrysler (MI:FCHA) detailed plans on Thursday to create the world's No. 4 automaker, IG Metall, Germany's largest union by members, said it would seek to preserve the autonomy of the French carmaker's German unit Opel.

The two groups have said no plants would be closed and an existing arrangement rules out forced layoffs at Opel, bought by PSA two years ago, until mid-2023.

But analysts expect the companies' factories in Europe which stretch from Portugal to Britain, to draw scrutiny because they have overlapping brands and underutilised factories.

FCA's underused plants in Italy employ some 58,000, more than a quarter of its workforce.

One of the main selling points of the deal is the projected annual cost savings of 3.7 billion euros ($4.1 billion) as the car industry struggles with rising costs from investing in electric cars and tough emissions targets while global car demand slows.

Securing support from Europe's powerful trade unions will also be critical for the merged company, which will employ more than 400,000 staff and operate hundreds of factories worldwide.

The deal has stirred concerns in Germany and Britain where plants making Opel and Vauxhall cars have seen jobs cut in recent year as part of a cost-cutting drive pushed by PSA CEO Carlos Tavares, who will also lead the merged company.

"We expect parent company PSA to preserve Opel and the development center, and to invest in Ruesselsheim," said Volker Bouffier, Prime Minister of the regional state of Hesse referring to Opel's headquarters.

Opel returned to profit in the first half of 2019 for the first time in 18 years.

Still lacklustre demand for Opel's Insignia sedan has forced Ruesselsheim to almost halve output to 68,000 vehicles this year, and to start shorter working hours, calling into question the need for current staff levels.

Britain's biggest trade union Unite said it wants a meeting with PSA management, saying the merger and uncertainty over Brexit are "deeply unsettling" for workers.

PSA runs a southern English van factory in Luton and a car plant in Ellesmere port, near Liverpool.

Highlighting particular worry in Italy, one of the country's top trade unions FIOM was the first to comment on the deal: it fears the merger could hurt factories there more than FCA's failed tie-up with Renault (PA:RENA).

"We are twice as worried about a potential FCA-PSA tie-up as we were about a merger with Nissan-Renault on the future of FCA's Italian factories" Michele De Palma, head of the auto sector workers at FIOM, told Reuters on Wednesday.

Politicans also voiced concerns about jobs.

In France, where Citroen celebrates its centenary this year, Finance Minister Bruno Le Maire gave his blessing to the merger, saying the deal would be good news for the country and Europe but that he would keep an eye on possible job cuts.

Italy's Prime Minister Giuseppe Conte said that merger plan must keep jobs and factories at home. He said he would talk to FCA Chairman John Elkann shortly to get details about the plan.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.