Vauxhall workers should fear for their jobs say West Midlands motor analysts

Vauxhall car workers would be in likely fear for their jobs if the company is sold by parent General Motors, a West Midlands motor industry expert has said.

Tougher labour laws in Germany would make it harder to close Vauxhall’s parent brand Opel, leaving the Griffin-badge vulnerable to cuts should any sale be agreed.

French carmaker Peugeot Citroen (PSA) is thought to be in the frame to acquire Vauxhall-Opel should GM opt to sell.

However, Christian Stadler, of Warwick Business School and a Professor of Strategic Management and the car industry, said the deal might not be in the best interests of British car workers.

Prof Stadler said: “PSA has made job cuts for the last three years and that has put PSA back into profit. It has used it successfully and I would be surprised if it doesn’t do it again.

“With Brexit and weaker unions in the UK than in Germany, I would be surprised if it is not the UK that suffers, it is more difficult to shut factories down in Germany. Unless the Government is able to give PSA incentives I would expect the job cuts to come in the UK.”

He said the proposed deal was a reflection of the way the world was changing, where firms were having to rein in their global ambitions.

“GM had a buyer lined up for Vauxhall and Opel in 2009, but it wanted to keep them because it was getting traction in the US with its small cars,” added Prof Stadler.

“But that has changed, first because the market for small cars in the US is no longer so attractive and, on the supply side, some of GM’s other partners have become more viable in developing small cars such as Shanghai Automotive Industry Corporation in China. It means Opel and Vauxhall are not so important anymore and GM has decided to concentrate its resources on the US, China and Latin America.

“GM has been losing market share in Europe. Opel is a strong brand in Germany, but it has become bogged down in battles with the unions and doesn’t understand the market as well or how unions are more partners in Europe, it is a different relationship it has not mastered.”

His colleague, John Colley, a Professor of Practice at Warwick Business School and an expert on mega-mergers, was also sceptical about the future of Vauxhall should it be sold.

“Carlos Tavares, CEO of Peugeot Citroen, has little choice but to close the UK Vauxhall plants at Ellesmere Port and Luton to make the Opel acquisition work,” he said.

“The cost of closing the high-cost German plants will be at least triple that of the UK plants. Not only will they have to placate the powerful German unions who have right of deal veto, but redundancy costs are around three times the level of the UK.

“Additionally, the German Government are supporting the unions in an attempt to retain employment. Brexit will also be a source of uncertainty which Tavares could do without.

“Government promises such as that given to Nissan are worth little in the long run. Governments tend to be transitory and not always disposed to keeping promises.”

He said there was little doubt that the Vauxhall-Opel brand was in need of cutbacks and this would be inevitable if PSA stepped in.

“Carlos Tavares will also need to develop and launch new models to revitalise the business if he is to prevent the continuing decline in European market share. Eastern Europe has the benefit of lower labour costs and being closer to demand. Brexit may start paying the price,” added Prof Colley.