UK raises alarm over threat to Vauxhall from GM-Peugeot deal

[February 15, 2017]  By Kate Holton

LONDON (Reuters) - Britain and its leading union expressed concerns on Wednesday at a plan by General Motors to sell its European operations to France's PSA Group in a deal that could put GM's Vauxhall operations in England at risk after Brexit.

Britain's largely foreign-owned car industry has thrived in recent years, but the vote to leave the European Union has cast doubt on future growth by raising the prospect of tariffs which would make UK plants less competitive.

Prime Minister Theresa May's government has already been forced to pull a deal together to persuade Nissan to keep investing in Britain, saying it would counter any loss of competitiveness caused by Brexit.

On Tuesday the news that GM had entered into talks with France's PSA over a deal to merge its loss-making Opel and Vauxhall brands with the French group's Peugeot, Citroen and DS names raised fears that the British Vauxhall brand could look vulnerable if an enlarged group needs to cut costs.

"The government remains in close contact with GM as we closely monitor the situation," a spokesman for the British Department of Business said, adding that the minister Greg Clark had already raised his concerns with GM President Dan Ammann.

Britain's car industry, which ships more than half of its exports to the other 27 countries in the EU, had lobbied hard against Brexit.

Since the vote last June, Prime Minister May has said that Britain will leave the EU single market, which guarantees unfettered trade on the continent, but suggested that certain industries may be able to retain elements of free trade.

An employee works on the Astra production line at the Vauxhall Motors plant in Ellesmere Port, northern England May 17, 2012. REUTERS/Phil Noble

Vauxhall employs around 4,500 staff in two plants near Liverpool and Luton, north of London, and supports other jobs through supply chain and retail links.

The Unite workers' union said the president of GM had given a private assurance last year that there would be no surprises in terms of GM's plants in Britain, and that these commitments had not been upheld.

"To Peugeot I say, talk to us," Unite General Secretary Len McCluskey said in a statement. "Our members have helped to make the UK auto industry the most competitive and productive in Europe and will do so again with the right backing."

McCluskey met Business Minister Clark on Wednesday to discuss the potential impact on Vauxhall and said he had urged the government to give the same assurances it had given to Nissan to other carmakers.

"It cannot be that the future of UK car workers’ jobs now lie in the hands of the French government and their backing for Peugeot," he said.

(Additional reporting by Ritvik Carvalho, editing by Estelle Shirbon and Jason Neely)

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