General Motors/peugeot: a deal that spells trouble for Britain
The French government “can usually be relied on to make an almighty racket” when there’s talk of a multibillion euro merger deal that could lead to thousands of job losses, said the Financial Times. Not last week. The mood in Paris was “relaxed – smug even” when General Motors revealed plans to sell its loss-making European operations to Groupe PSA, the owner of Peugeot and Citroën. For France, the move means creating a “larger French champion”. It’s the German and UK governments that have been left with the headache. They could be “left with thousands of angry workers” at GM’S Opel and Vauxhall plants, “at a time when anti-globalisation extremist parties are already on the rise in Europe’s former industrial heartlands”.
The outlook for some 4,500 Vauxhall workers looks precarious, to say the least, said Iain Dey in The Sunday Times. GM has racked up s8bn in losses in Europe since 2010, making it all but “inevitable” that PSA’S swoop will mean “the eventual closure” of the Ellesmere Port and Luton plants. The Business Secretary, Greg Clark, flew to Paris last week, returning with what he called “reassurances”. But UK union leaders are pushing for “Nissan-style guarantees for UK car plants”, said Rebecca Smith in City AM. That could be a tall order.
Globally, car-making has been on a roll, said The Economist, but change is in the air. GM’S big divestment “suggests a shift from the industry consensus that ‘bigger is better’”. Up to now, it looked like PSA was heading in a similarly niche direction: CEO Carlos Tavares’ strategy was to sacrifice sales for profitability. If he goes ahead with this deal, it will “represent a screeching U-turn” for Peugeot. GM’S decision to sell has obvious merits. The advantages for Peugeot are “much less clear-cut”.