Vauxhall workers wait for Peugeot buyout

(c) Sky News 2017: <a href="http://news.sky.com/story/vauxhall-workers-wait-for-peugeot-buyout-10791677">Vauxhall workers wait for Peugeot buyout</a>
 

The marriage will happen in Paris.

Representatives from four car companies will gather in the French capital today to announce one of the most significant deals in the recent history of European car-making.

The meeting will be hosted by the French giant PSA, which owns Peugeot (Other OTC: PUGOF - news) and Citroen, at is headquarters in Avenue de la Grande Armée.

And there with the French bosses will be senior management from General Motors (NYSE: GM - news) , Opel and Vauxhall, three companies that are about to be divided from each other.

Once the papers are signed and the handshakes exchanged, Opel and Vauxhall will become part of PSA which will, at a stroke, become the second biggest carmaker in Europe.

It will take over Opel factories across Europe, notably in Germany, and also inherit Vauxhall's two big plants in Britain.

And General Motors (GM) will have got rid of the companies that have been costing it billions in recent years. Both sides, you suspect, will think they've played their hand well.

But for 4,500 Vauxhall workers in Britain, this will be an announcement that brings a slew of questions over the future.

The company has two big plants in this country - in Ellesmere Port, where the Astra is made, and in Luton, home of the Vivaro van - and both have contracts to continue production for years to come.

Under the current agreements, the Astra would be built until at least 2021 while the Vivaro's production run is scheduled to go on until 2025.

The natural question for every Vauxhall worker to ask is: "What happens next?"

A week ago, PSA boss Carlos Tavares met with Len McCluskey, the leader of the Unite union, to offer some calming words.

Mr Tavares gave no public comment on the meeting, but Mr McCluskey said he had received "assurances that current production commitments would be met".

Later, the Business Secretary Greg Clark said he had found Mr Tavares "heartening" and was also told that "commitments to the plants would be honoured".

This deal has only been in the public eye for a matter of weeks, but industry insiders have told Sky News that it has been considered for years, and actively pursued for around 12 months.

Ever since PSA and GM started an active alliance in 2012, there have been suggestions of putting that relationship on a more formal footing, but those ideas were interrupted by PSA's sudden, and dramatic, financial crisis.

Only a bailout, funded by the French government and the Chinese company Dongfeng, kept PSA in one piece.

In came Mr Tavares as the new leader with new ideas.

He had a plan to recreate the company with a more aggressive, global outlook. And one of his long-standing plans was to buy Opel.

Mr Tavares believes that there is a ceiling to the number of people prepared to buy a French car.

But he is convinced that Opel will bring a German cachet to the company, expanding its reach not just in Europe, but around the world.

The question is whether he is quite as motivated by owning Vauxhall as he is by buying Opel.

There is probably no easy answer to that - if Mr Tavares wants to create global brands, he may feel baffled by a badge such as Vauxhall, which only exists in the UK.

But he will be more impressed, and more interested, in the long-standing success of both the Ellesmere Port and Luton plants - two of the most efficient car factories in Europe.

It would be a great surprise were he to renege on either of those productions deals, which means he has years to decide if he wants to maintain a presence in the UK.

As for GM - well it won't shed too many tears about this deal.

As well as getting a great pile of money - informed sources have told Sky News that PSA will pay around £1.7bn (€2bn) for the two companies - it will also rid itself of a distant division that has consistently lost money.

Like all the best deals, both sides will walk away thinking they got the better end of it.

By using Yahoo you agree that Yahoo and partners may use Cookies for personalisation and other purposes