Business secretary says plants are safe, but jobs may not be
31 May 2009

Business secretary Lord Mandelson has moved to calm speculation that Vauxhall's plants could be closed following the beginning of sale proceedings of GM Europe to Magna.

Mandelson said that he had spoken to GM Europe executives after they had picked Magna as their preferred bidder, and that they had reaffirmed their commitment that Vauxhall production would continue in the UK.

"I have in the last 24 hours spoken again to the senior executives of General Motors in Europe and again I have got their commitment reaffirmed to me - as I did previously, in the previous week with Magna - that their commitment to Vauxhall production continuing in the United Kingdom is firm," he told the BBC. "But we've got now to pin down specific plans and specific implications for jobs."

Mandelson stopped short of issuing any reassurances over job losses, saying that Magna had so far been vague both on its plans for the business and the implications for jobs.

He said, "We have to encourage Magna to pin down their commitment here in the UK. Frankly, in contrast to Fiat [a former bid contender], Magna’s business plans were vaguer. At least Fiat was clear."

Magna is known to want to cut jobs at Vauxhall, but it will be under pressure in meetings with Lord Mandelson to keep the number of redundancies as low as possible to secure millions of pounds of state aid that the government has promised to pay to help Vauxhall.

Lord Mandelson has made it clear that the amount of funding he earmarks for Vauxhall will depend on the level of commitment from Magna, covering the number of workers employed and the length of time the guarantees will last.

He also conceded that Magna's proposal to take over Vauxhall and Opel could threaten a key contract between Nissan Renault and Vauxhall's van making plant in Luton. Nissan Renault has a clause in its contract that states that it can renegotiate or even end the agreement with Luton, should the ownership of the plant change - as would be the case if Magna completes its deal to take over GM Europe.

Renault builds its Traffic van in Luton and the contract is set to run until 2012.

"These are among the many and details specifics of Magna's plans that we have to discuss with them and tie down," Lord Mandelson said.

"If they want British government to help underwrite this new company going forward, they are going to have to demonstrate what's in this new arrangement for Britain, for British production and British workers."

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