Is the purchase of Vauxhall-Opel by Peugeot owner PSA Group good news for Britain?

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There are fears that jobs could be lost at Vauxhall plants in Britain (Source: Getty)

Christian Stadler, professor of strategic management at Warwick Business School, says Yes.

As it stands, it looks very much like the PSA deal is good news for everybody involved. GM will get rid of subsidiaries that have lost money for 17 years. PSA will become number two in Europe and gain scale that is crucial at a time when substantial investment in e-vehicles and driverless cars is required.

Even UK workers might benefit. Although PSA is expected to cut jobs, Brexit might prevent the worst. Yes, you read correctly. In a rare twist, a hard Brexit can save jobs.

If future tariffs make trade between Europe and the UK more expensive, it is sensible for PSA to produce vehicles for the UK market locally. If (and that’s a big if) the UK government manages to negotiate better trade deals than the EU elsewhere, PSA might even export from the UK. The caveat: supply chains stretch across borders and a hard Brexit will increase these costs, possibly triggering additional cost-cutting exercises.

David Bailey, professor of industry at Aston University, says No.

A combined Peugeot-GM will look to achieve cost savings of some €2bn a year. These will likely come through joint procurement, technology sharing across models and brands, and plant closures and job cuts. That in turn raises the question of where the axe will fall.

Sadly, it’s the UK plants that look most vulnerable to cost cutting moves. That’s not because they are inefficient. Far from it; workers and management at both Ellesmere Port and Luton have pulled out all the stops in recent years to work flexibly, get costs down and win contracts to build new models, beating competition from across GM’s European plants when “locational tournaments” have been held to decide where to assemble models like the Astra and Vivaro van.

Rather, it’s the combination of the UK’s flexible labour markets (it’s easier to fire workers here), uncertainty over the UK’s trading position with Europe and the post-Brexit referendum sterling depreciation that leaves them especially exposed.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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