Professor David Bailey, of Coventry University, believes financial support is needed urgently otherwise Vauxhall plants could shut forever.
‘General Motors is expected to sign off the deal selling its majority stake in its Opel and Vauxhall operations in Europe to Magna and Sberbank any day now,’ he explains.
‘This, along with the tentative deal by the union Unite to cut costs and save jobs in the UK, ups the pressure on the UK government to reach a deal quickly on a financial support package for Vauxhall operations in the UK.’
GM Chief Exec ‘Fritz’ Henderson said on Thursday that it is ‘quite possible’ GM will finalise the sale this week.
The deal is expected to be sealed by the end of November. It adds up to some €5 billion, including around €4.5 billion in state financing, with Magna and Sberbank providing €500 million in equity.
Professor Bailey added: ‘The German government was first off the blocks back in May with a financial package to support Opel jobs in Germany.
‘This was no surprise given that Opel employs some 25,000 workers, so it was very welcome news that a tentative deal to secure the future of Vauxhall’s two UK plants has been agreed between Unite and Magna, in return for cost savings including a two-year pay freeze.’
Vauxhall employs more than 5,000 workers in the UK and the deal, if finalised, will give a window of 3-4 years’ security for the two plants at Ellesmere Port (which assembles the Astra) and Luton (which makes the Vivaro van).
The Luton plant will be maintained as a key site within Magna’s UK portfolio. The Professor says this is encouraging news as the plant was seen as vulnerable, although there is no guarantee beyond 2013.
However, he points out the missing piece of jigsaw is a credible government support package.
The government has yet to reach a deal on the conditions around a possible £400m financial support package for Vauxhall.
‘The government dithered for far too long on supporting JLR and when it did the conditions on offer were so onerous that Tata walked away,’ said the Professor.
‘The government appears to have learned lessons from that debacle and will hopefully now offer a financial deal that saves jobs at efficient Vauxhall plants in the UK. It needs to deliver.’