Mandelson demands talks over Vauxhall plans

Wednesday, 4 November 2009 12:00 AM

By Emmeline Saunders

Peter Mandelson has demanded private talks with American carmaker General Motors over its scrapped plans to sell its subsidiary Vauxhall.

The government has indicated it may offer GM financial support to guarantee the long-term future of Britain's Vauxhall factories and its 5,500 workers.

The business secretary said this morning: "I am keen for very early discussions with GM over their plans for the business and how they will affect British plants and workers.

"I have always said that if the right long-term sustainable solution is identified, then the government would be willing to support this."

GM had agreed to sell its European businesses Opel and Vauxhall to Canadian car parts supplier Magna, after almost going bankrupt earlier this year.

But last night the board met and decided to scrap the plan over concerns that the sale could see the two car manufacturers competing against GM in high-growth markets such as Russia.

The move delighted British union leaders. Tony Woodley, the general secretary of Unite, said: "It is the best decision for Britain and our plants. I am absolutely delighted that GM ha[s] finally done the right thing for them and for us."

Lord Mandelson is expected to offer loan guarantees of up to £400 million to help secure jobs at Ellesmere Port in Cheshire and the Luton plant.

He believes he is in a strong position to negotiate as both Vauxhall manufacturing plants are the most efficient in Europe.

But German chancellor Angela Merkel, who championed the Magna deal as it protected the most Opel jobs in her country, is said to be furious. The German government had offered £4 billion in financial aid to GM to broker the deal.

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