Peugeot owner PSA strikes Opel plant deal with Spanish unions

FILE PHOTO: Flags with the Opel logo are seen at the Opel headquarters in Ruesselsheim, Germany November 9, 2017. REUTERS/Ralph Orlowski

PARIS/MADRID (Reuters) - PSA Group struck a cost-cutting deal with Spanish unions at its newly acquired Opel division, as the French carmaker’s chief executive Carlos Tavares wrings concessions from workers in return for investment.

The maker of Peugeot and Citroen cars said in a statement on Tuesday it had reached agreement on a new contract with unions representing 75 percent of employees at Opel’s Zaragoza plant.

Opel, which PSA bought last year from General Motors, had warned that production of the next Corsa mini could move elsewhere unless a deal was reached to align costs with PSA’s other two Spanish plants in Vigo and Madrid.

Tavares is applying similar pressure at Opel’s Vauxhall factory in Ellesmere Port, northern England, where he says production costs are twice those at PSA’s French sites, adding to Brexit uncertainties weighing on the plant.

To take effect, the Spanish labor deal needs to be ratified by a full ballot of Opel workers, PSA said. The Zaragoza plant in northeastern Spain employs around 5,300 people and ran at 80 percent capacity last year.

The group is “convinced that the employees will understand the need to secure the future of the site through the performance plan, which will pave the way for new investments and projects,” it added.

PSA gave no details of the five-year framework agreement, which local newspaper Heraldo said provides for a wage freeze for 2018 followed by increases at half the level of inflation and a 5 percent cut to overtime pay.

Union sources said late on Monday that an accord was reached after more than 12 hours of talks and shortly before a deadline imposed by PSA.

Additional reporting by Paul Day in Madrid; Editing by Louise Heavens and Alexander Smith