Jobs hope as GM scraps Vauxhall sale

Published on Wednesday 4 November 2009 00:05

GENERAL Motors last night scrapped plans to sell off Vauxhall to a Canadian car parts firm in a move which could save thousands of British jobs.

A previously agreed takeover of GM Europe by Magna had threatened more than 10,500 jobs across Europe – including 6,000 in Britain.

But in a deal between German chancellor Angela Merkel and the prospective buyers, the sale would have retained jobs in GM's German Opel factories.

Now GM has decided to scrap the sale, holding out hope that Vauxhall jobs in the UK will be saved.

In a statement, Fritz Henderson, president and chief executive of General Motors, said the decision to retain Vauxhall followed a more benign business environment in Europe and GM's improved financial health.

He said: "We understand the complexity and length of this issue has been draining for all involved.

"However, from the outset, our goal has been to secure the best long-term solution for our customers, employees, suppliers and dealers, which is reflected in the decision reached today.

"This was deemed to be the most stable and least costly approach for securing Opel/Vauxhall's long-term future."

Mr Henderson added: "While strained, the business environment in Europe has improved. At the same time, GM's overall financial health and stability have improved significantly over the past few months, giving us confidence the European business can be successfully restructured."

Tony Woodley, secretary general of Unite, called the news an "incredible turnaround" by GM.

He said: "The decision is in my view a fantastic decision and the right decision for General Motors themselves. There's no logic in breaking up the company.

"It is the best decision for Britain and our plants."

He said there will now be negotiations with General Motors' bosses over plans to restructure the company.

The deal to sell off Opel and Vauxhall to Magna had the backing of the German government, which pledged 4.5 billion (4bn) of loans. It was seen as a massive boost for Ms Merkel, helping her win a recent General Election.

Prime Minister Gordon Brown and Business Secretary Lord Mandelson were accused of failing to secure a similar deal for Vauxhall's British workforce from Magna bosses.

At stake are 6,000 jobs at GM Europe's Vauxhall plants in Ellesmere Port, Cheshire, and Luton.

It is understood that Magna said it was planning as many as 1,200 job cuts in the UK, more than the government and Unite had been expecting.

British workers pinned their hopes on a European Union inquiry into Germany's role in the Magna deal with GM. The EU's Competition Commissioner, Neelie Kroes, is investigating whether the German government breached EU law by extracting a more favourable outcome for its workers in return for extending finance to the consortium.

Vauxhall is one of the great names of British motoring and can trace its history back more than 100 years.