Government Aid to Secure Vauxhall Jobs
The UK automotive industry gained a boost on October 13 when Lord Mandelson’s persuaded Vauxhall’s new owner to back down on redundancy plans that could have cost 5,000 workers their jobs. Magna International made a commitment to the long-term future of Vauxhall’s Ellesmere Port and Luton plants in exchange for concessions including a two-year salary freeze. Mandelson will now commence final talks with the German Government over how much Britain will contribute to the £4.1 billion state loan the Germans have committed to back the Canadian company’s takeover of General Motors Europe.
Details of the arrangement have not been publicly confirmed, however it appears that Magna’s concessions are conditional on receiving up to £450m in financial support from the government. The Business Secretary has commented that there is “some way to go” before a financing agreement with Magna is made. “I need to be convinced that the terms and conditions for the financing will be of the sort and standard that the Government expects when we put the taxpayer money into a company like this. We don’t sign a blank cheque,” he said.
Magna’s plans to reduce Vauxhall’s workforce by 20 per cent surfaced in October. The Ellesmere Port plant, where the Astra is manufactured, would have lost a third of its staff.