PSA Group’s Opel said on Friday that it was under pressure to cut costs, adding that management and staff representatives were able to reach a deal which includes giving its workers shorter working hours.
The German brand reiterated that it would not close any plants or enforce redundancies. The decision was reaffirmed despite its goal of making €1.1 billion savings under the PSA ownership.
Opel, the owner of UK’s Vauxhall, seeks to incorporate manufacturing with the existing PSA facilities. They also aim to prevent closing any car plants. This is to be done under ambitious plans of pulling the perennially loss-making division back to profit.
The deal resulted in trimmed hours in the engineering and administration departments. The trimmed hours will be incorporated for at least six months by the first of January.
This agreement also involves joint structure for both purchasing organizations of Opel and PSA’s brands. They will be cutting costs as they increase economies of scale.
Opel and PSA released a statement on Friday saying that work week will also be shortened to 35 hours by April 1 next year.
They added that 30 percent of savings from the integration would come from procurement during the long term.
“It is our common goal to make Opel competitive,” said Opel CEO Michael Lohscheller.
He then added, “With the agreement for Germany, the parties have defined a joint way forward and decided on important cornerstones. This once again underlines our intention to avoid plant closures and forced redundancies.”
The deal was meant to cut costs after Peugeot owner PSA acquired the money-losing automaker of General Motors in early 2017.
GM divested Opel after garnering a total of #19 billion of losses since 1999.
PSA chief executive Carlos Tavares said that he will be honoring already existing labor agreements in place. These agreements extend to around 2020 in France, Germany, and the UK. His statement was made during the time of the takeover.
PSA promised “necessary and unavoidable” cuts to labor back in November.
Analysts estimate that the company has to cut more than 5,000 workers at a potential cost of over €500 million.
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