British workers and unions are nervous about the future of Vauxhall plants like Ellesmere Port if PSA deal goes ahead

British workers and unions are nervous about the future of Vauxhall plants like Ellesmere Port if PSA deal goes ahead

General Motors has downplayed the possibility of large-scale factory closures in Germany and Britain following any deal to sell its European brands to Peugeot maker PSA Group, officials in both countries have said.

However, two sources close to PSA told Reuters that job and plant cuts were part of the French carmaker's ongoing discussions over a potential deal to buy GM's Opel and Vauxhall brands, with UK sites in the front line.

The structure of any deal has yet to be decided and it is unclear whether GM might have a stake in the combined business.

Following a meeting with GM president Dan Ammann on Thursday, British business minister Greg Clark said he had been reassured GM did not intend to "rationalise" its Vauxhall operations in Britain.

"There is some way to go in discussions between GM and PSA but I was reassured by GM's intention, communicated to me, to build on the success of these operations rather than rationalise them," Clark said in a statement cited by the news agency. "We will continue to be in close contact with GM and PSA in the days and weeks ahead." 

However, Britain's Unite trade union, which met with Ammann and Clark, said it had not received the guarantees it wanted.

"There's no assurances at the moment, this is a story that's unfolding and we'll wait to see what the next installment is," Unite leader Len McCluskey told Sky News.

"My immediate priority now is to understand where Peugeot is now in this process, which is why I am contacting the CEO of the company, Carlos Tavares, to request urgent talks," he said in a statement.

"It's much easier to cut jobs in Britain than Germany," one source with knowledge of the discussions between PSA and GM told Reuters, adding that Britain's move to leave the European Union was also a factor in the talks.

"Restructuring is very likely to happen at the Vauxhall plants," that source added.

PSA declined to comment to Reuters.

Separately on Thursday, the regional government of Rhineland-Palatinate, which is home to Opel's Kaiserslautern plant, welcomed the prospect of a deal with the French as an opportunity to create a "European champion."

Local politicians too had been reassured by GM executives following a briefing about the deal.

"Politicians in France and Germany have the aim of preventing job losses. There are signals that through the takeover, no plants in Germany will be closed," Malu Dreyer, Minister-President of Rhineland-Palatinate said in a statement cited by Reuters.

Analysts have said the rationale for combining PSA and GM's European brands would be both increased scale and cost savings.

Ratings agency Moody's said on Thursday acquiring Opel and Vauxhall should eventually help PSA's credit rating - providing the French carmaker pulls off the kind of turnaround that has eluded GM for years.

Doing so would require "substantial restructuring expenses weighing on future cash flow generation", analyst Falk Frey said in a note.

"The largest obstacle (to) this transaction is the ability of PSA to achieve a turnaround within a reasonable time frame."

Of GM Europe's roughly 38,000 staff, about 19,000 are in Germany and 4,500 in Britain, Reuters noted.