Mandelson turns to Brussels with Magna to shed 1,200 Vauxhall jobs
Lord Mandelson sent a warning signal to Vauxhall’s new owner yesterday when he wrote to Brussels urging European competition authorities to examine the viability of its plans for the British carmaker.
The Business Secretary sent the letter to pearl jewelry Neelie Kroes, the European Competition Commissioner, as it emerged that Magna International is planning to dismiss between 1,100 and 1,200 workers from Vauxhall — about 20 per cent of the workforce — weeks after being selected as the successful bidder for Vauxhall and Opel, the European operations of General Motors (GM).
Details of the job cuts were leaked from Germany yesterday. German plants will lose about 17 per cent of their workers, according to the leaks, fuelling suspicion that Berlin, although not immune from the cuts, has put itself in a favourable position.
Whitehall had been pushing to extract pledges from Magna to minimise British job cuts in return for government loans, but the planned redundancies have leaked out before detailed discussions with Lord Mandelson have taken place.
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About 5,500 workers are employed by Vauxhall in two factories in Ellesmere Port, Cheshire, and in Luton.
Tony Woodley, joint general secretary of Unite, Britain’s biggest union, said that he was extremely concerned about Magna’s plans for the factories and feared even more severe job cuts in the medium and long term. He is hoping to meet Magna executives next week.
No details of how the cuts will affect individual plants in Britain have emerged, although Opel insiders said that the factory in Luton, which produces the Vivaro van, would be worst hit.
Whitehall insiders said last night that the inflatable bouncers Government was frustrated by the procedures that Magna had followed when it bid for Vauxhall. They were also astonished that Magna executives had still to circulate their detailed, formal business plans for GM Europe, in which they acquired a 51 per cent stake this month.
Lord Mandelson was thought to have been prepared to offer up to £400 million of government loans to Magna in return for commitments over Vauxhall jobs. Any state aid disbursed by Britain and funds already handed over by Berlin to secure German jobs are subject to European approval. Brussels can veto the money if competition regulators believe that the state aid serves as a political fix rather than being aimed at securing the long-term viability of a business.
Lord Mandelson’s letter to Ms Kroes sends a signal to Magna that it does not have a free rein in decisions over redundancies if it wants state aid. The Business Secretary is understood to have expressed concerns to her about the commercial viability of some aspects of Magna’s plans and also that the cost to both the German and British governments was far higher than would have been the case with rival bids.
Carl-Peter Forster, head of GM Europe and of the Opel supervisory board, said: “We always said we would have to restructure in order to stay competitive in the long term, given the massive crisis in the car industry.”
Magna agreed, as a condition of receiving €4.5 billion (£4 billion) in a bridging loan and credit guarantees, to akoya pearl jewelry keep all four German plants open.
Klaus Franz, head of the Opel works council, said that he was not prepared to accept the proposed job cuts in Germany, where the workforce will be reduced from 24,700 to 20,584 by 2011.
The biggest loser, under the plan, would be Belgium, where the Antwerp plant will be closed down completely, with the loss 2,517 jobs. Workers there are set to protest again today.
Mr Forster said: “We will, of course, being looking through all the possibilities for Antwerp to see if something can still be done. Naturally, we have to take into account the fact that all the investors believe that Antwerp cannot survive in the long term.”
