Merger Opel Safe for Now

After PSA announced its deal with GM to purchase Opel in February, employees at the German carmaker began to worry about their future. While the Opel workers council was able to offer them some reassurances, questions remain about how PSA plans to make the company profitable again.
Opel employees in Rüsselsheim on their way to the factory. Photo: Andreas Arnold/dpa

Recent turbulence at the Opel factory Rüsselsheim over the past few weeks finally seems to be coming to a close. After numerous meetings, Opel employees were informed Thursday how things will continue under the PSA umbrella. Opel’s sale to the French multinational carmaker, which includes Peugot and Citroen, has been the source of much anxiety, particularly regarding job cuts.

Workers council reps sought to assuage employees’ concerns, promising that codetermination – the legal right for German employees to participate in decisions made by management – will also continue under the future owners. “We are pleased that we have been able to push through some key demands,” said Wolfgang Schäfer-Klug, head of the Opel works council, at the company’s headquarters in Rüsselsheim.

Yesterday, the company, together with the workers council, announced that in the future all of Opel’s European subsidiaries will be bundled together under one roof. Mr. Schäfer-Klug ventured a biblical comparison, saying the new Opel Group will be structured “like an ark.” For that reason, Adam Opel AG, which contains most of the operating business, will be changed into a limited liability company. After that, the parent Opel Group is to be integrated into the new company.

The level of company codetermination will be retained by establishing a worker participation agreement, the workers council announced. They also added that this agreement will be redrafted for the new company, which they hoped would dispel employees concerns that PSA will be able to “impose its will.”

Worker council reps sought to assuage employees’ concerns, promising that codetermination will also continue under the future owners.

The workers council also ramped up the pressure on the former parent company, General Motors, to ensure that all collective wage agreements will once again be anchored in the new Opel company. “As was promised to us,” Mr. Schäfer-Klug said. So far there have been no written assurances, though the council has already announced that all agreements with General Motors will be in place even after the sale is finalized.

The workers council also announced that the future of the Opel works in Eisenach is secure. Beginning in 2019, the successor to Opel’s Mokka X model is scheduled to be produced there, as had been previously promised by General Motors. GM models – primarily earmarked for export – are also supposed to continue being produced at Opel production sites. Additionally, a large SUV will make its way off the assembly lines at the main factory in Rüsselsheim by the end of the year.

Opel’s components factory in Kaiserslautern, which many market observers predicted would be closed, is also to continue to deliver parts for the German Opel works. Questions concerning the future workload of the development center in Rüsselsheim and other European location have been largely cleared up, the works council announced.

Still, some questions remain. While GM had previously announced that it “intended” to assume responsibility for pension obligations amounting to some $3.2 billion, agreements have yet to be signed. During the beginning of sales negotiations, employees had initially declared their loyalty to the Opel management. However, over the past few weeks, they were forced to realize that they were not being accurately or thoroughly informed about negotiations. With General Motors refusing to release the necessary information, employees were in a bind, as they were legally prohibited from holding discussions with PSA due to antitrust laws.

The works council also ramped up the pressure on the former parent company, General Motors, to ensure that all collective wage agreements will once again be anchored in the new Opel company.

This brought a difficult week to a close. For Mr. Schäfer-Klug, who had become a vocal critic of General Motors, things are now finally starting to settle down. The week began with a conglomerate of individual European workers councils swearing to a common course of action for the 38,000 Opel workers. The Opel summit in Berlin followed on Wednesday, organized by Brigitte Zypries, Germany’s minister for economics and energy.

At meetings between representatives of workers councils, trade unions and governors from German states containing Opel factories, Peugeot CEO Carlos Tavares had showed a willingness to compromise. Mr. Tavares plans to continue running Opel as an independent brand, as well as respect agreements to keep factory sites open and maintain jobs. Mr. Tavares had already made similar verbal commitments in a telephone conversation with German Chancellor Angela Merkel prior to the signing of the purchase contract. The German metal workers union, IG Metall, has said they plan on holding Mr. Tavares to his promises.

It is still unclear how a restructuring plan might look – that is, one which Opel CEO Karl-Thomas Neumann could use to convince the new French parent company to make the German brand profitable again in the next couple of years. Mr. Tavares has already defined the hurdles that need to be overcome, including €1.7 billion in synergy gains per year from the Opel takeover. The time-honored German brand is expected to be profitable again by 2020 – despite the agreements made this week.

Ferdinand Dudenhöffer, a professor of automotive research who was criticized by Opel employees for his pessimistic takeover forecasts, remains convinced that job cuts will take place. “Peugeot needs quick profits to push forward its internationalization,” he explains, adding that things would look differently if the German government were involved in the restructuring. “Normally with job security, politicians always bring concessions and subsidies into play,” said Mr. Dudenhöffer. But that wasn’t mentioned in the discussions in Berlin, say sources close to the negotiations.

 

Lukas Bay is an editor with Handelsblatt's companies and markets section. Contact the author: [email protected]