German threat to Vauxhall’s future

Nov 22 2008 by Alistair Houghton, Liverpool Daily Post

THE Government must supply cash to support car manufacturing at Vauxhall in Ellesmere Port or risk losing out to European rivals, unions and political leaders said last night.

The international car industry crisis has led to fears for the future of Vauxhall’s owner GM and its European subsidiaries, including Opel in Germany. GM and fellow struggling US motor firms Ford and Chrysler, which have been crippled by falling sales as the credit crunch bites, appealed to the US Government for emergency funding of $25bn (£16.9bn) to help them avert potential collapse.

The German government has already signalled it is prepared to support Opel – raising fears that if the British Government does not make the same commitment, then manufacturing could move from the UK to Europe.

Now Ellesmere Port union convenor John Fetherston says the UK Government must at least match that to secure the future of Vauxhall’s British workers, including 2,200 at Ellesmere Port.

He added: “Whatever the German government does, I would hope the UK government would do the same to support us.

“The German government has done exactly what any government should do. I would expect, and the people at Vauxhall and Luton in Ellesmere Port would expect the UK government to support the industry.”

Unite’s Merseyside-born general secretary, Tony Woodley, has been holding talks with Government to call for support for the motor industry.

Earlier this month he said he wanted Business Secretary Peter Mandelson to create a global rescue package for the car industry.

Cllr Mike Jones, leader of the shadow Cheshire West and Chester Council, said he was “very concerned” that if Germany supported its motor industry and the UK government did not follow suit, GM could be tempted to move some production to Germany.

He said: “A lot of people have worked very hard in Ellesmere Port to retain the Vauxhall site in full operation. It employs a lot of people and I don’t seen why they should be discriminated against when they need funding just as the government of Germany chooses to support its car industry.

“If the German government supports its car industry and ours does not, that’s discrimination.”

Ellesmere Port & Neston borough council leader Justin Madders said he was hopeful the Government would back Vauxhall and secure its skilled labour force for the town.

He added: “They’ve bailed out the banks, so I don’t see why just because this is a traditional industry, the same principles shouldn’t apply.

“The British government has been supportive of the Vauxhall plant for the past few years. That’s why we secured the next generation Astra.”

The Ellesmere Port plant has already been hit by the credit crunch and resulting slowdown in car sales, and has announced several non-production days.

Mr Fetherston said he remained confident in the future of the Ellesmere Port plant despite the tough times it currently faces.

The plant is set to start building Vauxhall’s new Astra model in September and union leaders hope that will secure its long-term future.

Jaguar Land Rover, which employs more than 2,000 people at its Halewood plant, has also had to announce non-production days and redundancies this year to counter a sales slowdown.

But some motor industry analysts have warned that UK motor production could face drastic cuts as the slowdown bites.

Professor Garel Rhys, director of the Centre for Automotive Industry Research at Cardiff Business School, said he expected the European motor industry would shed 20% of its jobs in the next five years.

He said GM could close one European plant to save money – and said Ellesmere Port would be second on their list.

And Prof Karel Williams, of Manchester Business School, has warned that car-makers will look to move more manufacturing to lower-wage countries such as China and India, putting question marks over the future of large-volume UK manufacturing plants such as Vauxhall at Ellesmere Port.

In the US, Congress has given the big three car-makers until early December to come up with new plans for the potential bailout.

In Germany, where Opel is asking for 1bn Euros (£846.5m) of Government support, Chancellor Angela Merkel has said she will make a decision on funding by Christmas.

Transport Secretary Geoff Hoon, speaking at the launch of the new Toyota Avensis in Derbyshire yesterday, said the Government would introduce measures in its Pre-budget Report on Monday to “rebuild consumer confidence” and get people buying cars again.

alistairhoughton