PSA Group Plan to Buy Opel Quickly Hits Potential German Hurdle

(Bloomberg News/TNS) -

PSA Group’s proposal to buy General Motors Co.’s Opel brand quickly ran into a potential hurdle in Germany, with politicians and labor leaders vowing to protect jobs and the unit’s manufacturing footprint in the country.

“The company carries responsibility for the sites, the development center and the securing of employment,” German Economy Minister Brigitte Zypries, a Social Democrat, said in an emailed statement to Bloomberg on Tuesday. “This is my clear expectation regarding General Motors.”

Minister Zypries called it “unacceptable” that GM discussed a possible Opel sale without first speaking with the works council, labor unions and the state government in Hesse, where Opel is based. The manufacturer has two plants in Germany, and the future of jobs at the sites could become a topic in this year’s federal election.

A combination of Opel and PSA would create a manufacturer with about 16 percent of the European car market, pushing past Renault SA to become the region’s second-biggest auto group after Volkswagen AG. A deal would also be the second run at linking the two mass-market carmakers. Any renewed effort is likely to center on finding ways to cut costs — and ultimately jobs — because the two have overlapping product offerings.

Germany’s IG Metall labor union and Opel’s works council said they were caught by surprise with news of the potential sale of Opel to PSA, the maker of Peugeot and Citroen brand cars. Any such talks without their consent would be “an unprecedented violation of all German and European co-determination rights,” the two said in a joint statement.

Hesse Prime Minister Volker Bouffier said earlier that he’ll seek talks with company management, with a view to securing jobs and keeping Opel’s development center — “the core, the most important part of Opel” — in Ruesselsheim, outside Frankfurt.

“I can’t rule out that General Motors has made an assessment that they want to pull out of Europe,” Bouffier said. While it’s speculative, “it could also be that General Motors, with respect to the vision of the new American president, has decided to concentrate more on America and less on Europe.”