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Concerns grow over Vauxhall plants after merger proposed

The plans put in doubt the future of Vauxhall’s Ellesmere Port and Luton factories.

Vauxhall employs 3,000 people in the UK (Martin Rickett/PA)
Vauxhall employs 3,000 people in the UK (Martin Rickett/PA)

By Neil Lancefield, PA Transport Correspondent

Concerns about the future of Vauxhall in the UK have grown after its owner PSA Group confirmed plans to merge with Fiat Chrysler.

The 50-50 merger has not been finalised, but if it goes ahead then significant cost-saving measures could put the future of Vauxhall’s Ellesmere Port and Luton plants at risk.

PSA Group and Fiat Chrysler said they expect to reduce costs by 3.7 billion euros (£3.2 billion) without any factory closures.

Professor David Bailey of Birmingham Business School said British plants may not be immediately closed but remain under threat.

He told the PA news agency that the Italian government will want to preserve factories at Fiat in Italy, while the French government – a part-shareholder in Peugeot-owner PSA Group – will be keen to maintain jobs in France.

He went on: “Luton and Ellesmere Port are both very efficient plants. They’ve competed to win contracts very successfully despite the Brexit uncertainty.

“But I think given the merger of these two giants, there will be pressure to take capacity out, and British plants will be vulnerable.”

PSA Group announced in June that it planned to build the next generation of the Astra at the Ellesmere Port factory, but warned this was conditional on the final terms of the UK’s withdrawal from the EU.

Vauxhall employs 3,000 people in the UK.

Trade union Unite’s national officer Des Quinn said merger talks combined with Brexit uncertainty are “deeply unsettling for Vauxhall’s UK workforce”.

He added that if PSA Group wants to sell Vauxhall-branded cars and vans in the UK “then it has to make them here”.

The merger would create the world’s fourth largest car company, behind Toyota, Volkswagen and the Renault-Nissan alliance.

A combined Fiat Chrysler-PSA Group would have a market value of around 50 billion US dollars (£43 billion) and produce 8.7 million cars a year.

PSA Group chief executive Carlos Tavares, who will have the same position at the new company if the merger is finalised, said: “This convergence brings significant value to all the stakeholders and opens a bright future for the combined entity.”

A proposed merger between Fiat Chrysler and Renault collapsed in June after the latter’s biggest shareholder, the French government, intervened.

Car manufacturers around the world have been hit by a reduction in sales, with UK car production for the first nine months of the year at its lowest level since 2011 amid Brexit uncertainty.

Figures from the Society of Motor Manufacturers and Traders show 989,174 cars were produced in the UK in the first three quarters of 2019, representing a 15.6% deficit year-on-year.

PA

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