PSA says will honor existing Opel job guarantees

FRANKFURT/PARIS (Reuters) - PSA Group PEUP.PA has pledged to respect existing Opel and Vauxhall job guarantees if it buys the European arm of General Motors GM.N, though some analysts say thousands of jobs are eventually likely to go for the deal to work.

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As part of a broader charm offensive, PSA Chief Executive Carlos Tavares met with representatives of powerful German labor union IG Metall and Opel’s European works council on Monday to discuss the impact of any deal on existing sites.

“PSA Group reaffirmed its commitment to respect the existing agreements in the European countries and to continue the dialogue with all parties,” Peugeot maker PSA said in a statement on Tuesday.

General Motors (GM) has pledged not to impose forced redundancies on some of its German workforce until the of end 2018, IG Metall said, while some existing agreements about building certain models at Opel stretch beyond 2020.

However, some analysts say PSA will eventually need to make big cuts to turn around loss-making Opel and sister brand Vauxhall in a European car industry that has struggled for years with overcapacity.

“It’s about hard restructuring in Germany, the UK and in Spain resulting in at least 5,000 manufacturing job cuts. In the end, an integrated General Motors Europe will likely have 20 to 30 percent fewer workers,” Evercore analysts said in a note.

Germany accounts for about half of Opel’s 38,000 staff, while 4,500 are in Britain where Opel operates as Vauxhall.

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Two sources close to PSA told Reuters last week that job and plant cuts were part of the tie-up talks, with the two Vauxhall sites in Britain in the front line.

Paris-based PSA said in an emailed statement it planned to work closely with Opel unions including IG Metall to “find a path to the creation of a European champion with Franco-German roots.”

“Tavares communicated convincingly in the talks that he is interested in a sustainable development for Opel/Vauxhall as an independent company,” European works council chief Wolfgang Schaefer-Klug said in a separate statement.

Britain’s Unite union has yet to receive assurances from PSA officials regarding the possible takeover of Vauxhall, with the first opportunity at the works council on Wednesday followed by a meeting between Tavares and union head Len McCluskey in London on Friday.

Additional reporting by Maria Sheahan in Frankfurt and Costas Pitas in London; Editing by Mark Potter