DaimlerChrysler and German-based engineering group ThyssenKrupp plan to form a joint venture to build steering systems, according to media reports. An IG Metall union representative told Reuters that under the plan Thyssen would take a 60 percent stake in the joint venture, with Daimler holding the remaining 40 percent.

A union source told Reuters that the management of both companies had signed declarations of intent on January 21, with an option for Thyssen to buy out the Daimler stake in 2005 as part of the agreement.

Both companies have declined to comment on the reports but a ThyssenKrupp spokesman has confirmed that the companies have been in talks.

The possibility of industrial action by workers opposed to the plan has already emerged.

The joint venture could involve the shifting of some of the activity of Mercedes-Benz Lenkungen GmbH to Schoenebeck near Magdeburg in eastern Germany from its current location at Duesseldorf, the IG Metall union told Reuters.

The Handelsblatt newspaper reports that workers at Lenkungen, might cut two overtime shifts next weekend to protest against the agreement.

It was reported last autumn that the two companies were in talks. DC has been keen to spread the high costs incurred by its Lenkungen steering unit.

ThyssenKrupp has been relatively active in automotive M&A activity in recent years, with a number of negotiations involving parts units owned by vehicle makers. The company has also been in talks with GM’s Opel about its Kaiserslautern parts facility.