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

Published Oct 31, 2019 11:28AM ET
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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.

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

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Comments (1)
Dietmar Stahl
Dietmar Stahl Nov 03, 2019 2:27AM ET
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The most stupid merger of all time. Really PSA has more money then FCA unbelievable.Finally the complete destruction of the Italian Automobile Industry. Unbelievable what the late CEO if Fiat did to this concern. He completely destructed FIAT, Lancia and Alfa Romeo which were good companies with good line ups from the mid 90's to 2007. There were tons of Alfa's sold in Germany but Fiat decided not to upgrade models. Fiats line got from very good to very small ugly cars and then got wondered at why the sales where not good.And now this horrible merger. It's just the end of Fiat, Lancia and Alfa and Chrysler. Only Jeep and Dodge will be carried on.Return at least Alfa Romeo back to Italian State Control so Fiat can not destroy it further.D. Stahl
 
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