Mandelson 'satisfied' with Vauxhall sale

Business Secretary Lord Mandelson remained upbeat about the future of Vauxhall's British workforce despite the business being sold to a Canadian firm.

The sale of General Motors' European operations to car parts giant Magna, backed by the Russian Sberbank, has left the Vauxhall workforce concerned that the Ellesmere Port and Luton plants will close.

But last night Lord Mandelson said he was satisfied with the deal.

"I'm glad the immediate uncertainty about GM's future has been removed," he said.

"We must now hope this GM/Magna/Russian deal will bring stability in the longer term.

"I have had four face-to-face meetings with Magna in the last couple of months. I am satisfied about their commitment to Vauxhall's plants.

"The Government will now discuss our share of the funding of the deal and I expect to tie down the details of this in the near future."

But union officials fear the sale will save more jobs in Germany than in other European countries where GM has factories.

Workers leaving Vauxhall plants yesterday said they felt "devastated" by the development, following earlier speculation that GM had decided against a sale.

A female factory worker at Ellesmere Port said: "We don't know what's going on. We're not quite sure yet. Everybody's quite fed up about it. We found out by news clips on the radio, and we don't get told properly. There was no announcement to us. We're just not very happy about it at all."

Another worker said: "I'm absolutely devastated, for the simple reason it doesn't secure the long-term future for this place. The morale is low, considering GM said this morning they were keeping hold of it. We were buoyant coming into work and absolutely decimated coming out of work.

"It has a knock-on effect, doesn't it? It could have adverse effects on this place."

Asked if he thought the Ellesmere Port plant could be on its way out, he said: "The general consensus on the shop floor would be yes."

The Government stressed that it was inevitable there would be restructuring of the business which would affect Germany as well as other countries.

Business Minister Pat McFadden said: "Our objective throughout has been to get the best possible outcome for the Vauxhall workforce and the production plants in the UK.

"We have been in close contact with all parties throughout, including GM in the US and Europe and all the potential bidders.

"Now GM has announced its preferred bidder is Magna, we will continue our discussions with Magna. They have told us of their commitment to continuing production at both Ellesmere Port and Luton and we will work to make sure we get the best possible outcome for the UK."

Unite union joint general secretary Tony Woodley said: "The uncertainty surrounding the ownership of Vauxhall is now over, but the uncertainty surrounding the long-term future of Britain's plants will continue.

"One of the alternatives could have been the unthinkable position of liquidation. Nevertheless, with Magna as the new owner, we need to make sure that British plants and people are not treated disproportionately during the restructuring that will take place. With that in mind, the union and the Government will no doubt continue to negotiate with Magna.

"We expect financial support from the UK Government for Magna to be dependent on the job and plant commitments given by the company."

Unions had been pressing GM not to sell its European business, believing this would be the best option for securing jobs in the UK.

GM said its board had recommended selling a majority stake of 55% in Opel/Vauxhall, with employees holding a 10% stake, a decision which was later ratified by the GM Trust.

President and chief executive Fritz Henderson said: "Several key issues will be finalised over the next few weeks to secure the binding agreements, including the written support of the unions to support the deal with the necessary cost restructuring for viability and the finalisation of a definitive financing package from the German government.

"The definitive agreements should be ready to sign within a few weeks, with closing to follow within the next few months. Under the deal, Magna/Sberbank will purchase a 55% stake in New Opel, GM will hold a 35% stake and employees will be provided a 10% stake.

"The hard work over the past two weeks to clarify open issues and resolve details in the German financial package brought GM and its board of directors to recommend Magna/Sberbank."

John Smith, GM Group vice president business development, added: "GM operates many joint ventures around the world and has proven in the past that this business model delivers the right balance of independence, innovation and synergies."

Magna said it would honour existing contracts at Luton until 2013, but has not given any commitment beyond this point.

The Luton plant has a contract to build Vivaro vans as part of a deal with Renault, which has a clause that allows it to pull out of the contract if there is a change of ownership of GM Europe.

German Chancellor Angela Merkel told a news conference in Berlin that the move was the outcome her government had been working towards as it fought to preserve the firm's 25,000 jobs and four plants in Germany.