Companies & Markets

OPEL ACQUISITION

PSA Chief Gives His Word on Jobs

Labor and government representatives are trusting that Carlos Tavares is a man of his word. Picture source: Reuters.

Source: Reuters

For now, labor representatives at Opel will have to take Carlos Tavares’ word for it.

During a meeting in the German economics ministry on Wednesday, the chief of French carmaker PSA promised to uphold all labor and investment agreements, which run through 2018 and 2020 respectively, after the company completes its acquisition of Opel.

Labor representatives, however, are looking for more than just promises from Mr. Tavares. They want a signed, legally binding agreement, something the PSA Group says it cannot deliver quite yet.

Citing anti-trust laws, the PSA Group says it cannot sign anything until the acquisition is complete. The automakers are technically rivals until the deal is done, so they cannot dive into negotiations about the future just yet, according PSA’s reading of the legal situation.

In the absence of a binding agreement, the meeting served more as an opportunity to build trust between the major stakeholders than anything else. The PSA Group and labor representatives at Opel got off on the wrong foot to say the least. Labor felt blindsided by GM’s decision to sell Opel to the PSA Group in February.

Labor representatives are deeply concerned that Opel’s 19,000 employees at plants in Eisenach, Kaiserslautern and Ruesselsheim could get the short end of the stick in the €2.2 billion deal.

After all, Opel isn’t exactly a cash cow. US parent company General Motors agreed to sell Opel to the PSA Group after trying and failing for years to turn its loss-making European subsidiary around.

Given the stakes in terms of German jobs, the meeting at the economics ministry was packed on Wednesday.

Mr. Tavares and PSA’s general secretary, Olivier Bourges, sought to ease the concerns of Economics Minister Brigitte Zypries, Jörg Hoffman of the powerful IG Metall trade union and Opel’s deputy labor chief Lothar Sorger. The leaders of the states with Opel plants – Rhineland-Palatinate, Thuringia and Hesse – also sat in on the discussion.

Participants, who declined to be named, told Handelsblatt that the mood at the meeting was “positive and optimistic.” Ms. Zypries welcomed Mr. Tavares’ promise to honor all of Opel’s labor agreements.

The labor side, however, is pushing for a binding agreement as soon as possible. Opel’s deputy labor chief, Lothar Sorger, said discussions should start as soon as the legal framework is in place. Mr. Sorger said he expects PSA chief Tavares and General Motors to create “all the legal requirements for the continuation and fulfillment of existing contracts.”

The German government also has intense interest in the deal, given the fact that jobs are at stake and it’s a federal election year. Berlin has said it will work to preserve Opel jobs and plants in Germany.

National trade unions such as IG Metall and Opel’s works council also vowed on Wednesday to work for a “long-term perspective for all brands and production locations and the development center of Opel/Vauxhall in Europe.”