April 18, 2018 / 3:08 PM / a month ago

Merkel says German government must help in Opel dispute

BERLIN (Reuters) - Chancellor Angela Merkel said on Wednesday she expected Peugeot maker PSA Group (PEUP.PA) to stick to the commitments it made during its takeover of Opel last year and that the German government felt it had to help.

German Chancellor Angela Merkel attends a news conference after a meeting of leaders of East German federal states in Bad Schmiedeberg, Germany, April 18, 2018. REUTERS/Axel Schmidt

The future of Opel’s Eisenach factory in Germany hung in the balance on Monday after shop stewards rejected wage concessions demanded by PSA in exchange for a commitment to invest in a production line for a new model there.

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

FILE PHOTO: Opel sign is displayed on the car during the motor show in Riga, Latvia April 6, 2018. REUTERS/Ints Kalnins/File Photo

PSA Group said in February 2017, before buying the European arm of General Motors (GM.N), that it would uphold job guarantees at Opel and Britain’s Vauxhall, offering reassurance to both Merkel and unions at the German carmaker.

    Analysts said at the time it would be tough to keep that promise and, with Opel still losing money, management had pressed union leaders to forgo a 4.3 percent pay rise this month to create enough leeway for further investments in Germany.

    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 a sport-utility vehicle in Eisenach, rather than two models, and that it planned to work only two shifts instead of three previously.

    Responding, Opel said it didn’t comment on speculation, but added: “Improving the competitiveness of the Eisenach works is currently a matter under discussion with our social partners, and is a precondition for sustained investment.”

    Reporting by Michelle Martin in Berlin and Douglas Busvine in Frankfurt; Editing by Thomas Escritt and Mark Potter

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