Germany may intervene in Opel dispute with Eisenach plant workers

19 April 2018

Germany may intervene in Opel dispute with Eisenach plant workers

19 April 2018

The German Government may intervene in an ongoing dispute between PSA Group and workers at its Opel facility in Eisenach, Germany, following the rejection of wage concessions by shop stewards.

Management teams from the manufacturer met with the works council and labour union IG Metall to discuss proposals from the French group, which took control of Opel in August last year. German sites were absent from recent PSA proposals on investment in its plants, while the group recently announced investment in the Vauxhall plant at Luton.

PSA Group CEO has constantly been frustrated by the production of Opel and Vauxhall plants, describing existing facilities owned by the French firm as more efficient. The company is aiming to cut costs and return the German manufacturer to profitability, and reducing workforces and moving production around the group is a large factor in achieving this.

The labour side rejected management's demand for wage concessions such as delaying the 4.3% pay rise agreed in collective bargaining for the industry, due at the end of April. In return, PSA was promising investment in the plant, including producing an electric version of the Grandland X model. ‘Contracts must be observed, and we demand that from Opel as well,’ Joerg Koehlinger, an IG Metall regional director said in a statement.

Spiegel magazine, citing sources at labour union IG Metall, reported that Opel would cut the workforce at the Eisenach assembly plant to 1,000 from 1,800 if existing production plans were implemented.

The magazine reported that Opel management now wanted only to produce an SUV in Eisenach, rather than two models and that it planned to work only two shifts instead of three previously.

Now, German Chancellor Angela Merkel has provided comment, saying she expects PSA Group to stick to the commitments it made during its takeover of Opel.

‘The German government, along with the regional government here, feels obliged to do its bit to help,’ Merkel commented. ‘These discussions are ongoing, but I can't say anything about the results yet.’

PSA said in February 2017, before buying the European arm of General Motors, that it would uphold job guarantees at Opel and Britain's Vauxhall, offering reassurance to both Merkel and unions at the German automaker.

The company has already started its process of cost-cutting at sites. It has already reduced the workforce at the Vauxhall plant at Ellesmere Port by 650 as it looks to increase production efficiency. There is also speculation that manufacturing of the Astra model at the UK plant could be moved into mainland Europe as a result of Brexit.

PSA Group also recently announced it was to cancel all Opel and Vauxhall dealership contracts with two-year’s notice, as it looks to slim down the network and offer a stronger services package to consumers while tackling cost issues.