US car giant General Motors has now decided it will keep its European operations, pulling out of negotiations that would have seen them sold to Canadian parts maker Magna.
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General Motors (GM) says the change of plans is due to improving market conditions, which means it now has the cashflow and resources to start restructuring its European brands instead. Opel and its UK subsidiary Vauxhall will now remain under American control.
Months of negotiations have failed to secure agreeable terms for the sale of Vauxhall and Opel to Magna and its Russian partners, but the last minute decision to withdraw has angered some parties, including the German government, which had already put in place a financial package for Magna to support its purchase of the companies.
Good news for Vauxhall in the UK
Union bosses are, however, optimistic that the decision could be good news for jobs at Vauxhall’s UK factories, including Ellesmere Port, where the new Astra is built.
Fritz Henderson, president and CEO of GM said: ‘We understand the complexity and length of this issue has been draining for all involved. However, from the outset, our goal has been to secure the best long-term solution for our customers, employees, suppliers and dealers, which is reflected in the decision reached.
Justifying GM’s unexpected decision, Henderson explained: ‘While strained, the business environment in Europe has improved. At the same time, GM’s overall financial health and stability have improved significantly over the past few months, giving us confidence that the European business can be successfully restructured.
‘This was deemed to be the most stable and least costly approach for securing Opel’s long-term future.’
In order to achieve this long-term security, GM will be restructuring its European business.
‘GM will soon present its restructuring plan to Germany and other governments and hopes for its favourable consideration,’ Henderson continued. Initial calculations suggest the scheme will require £2.7 billion worth of additional investment – a great deal of money, but ‘significantly lower than all bids submitted as part of the investor solicitation’.
European labour organisations will be expected to cooperate with these plans in order to ‘develop a plan for meaningful contributions’ to the restructuring, so Vauxhall workers are certainly not entirely in the clear yet.
UK Business Secretary Lord Mandelson has already emphasised the British Government’s eagerness to speak with GM as soon as possible, and is suggesting a financial aid package may be available to ease the transition.
‘I am keen for very early discussions with GM over their plans for the business and how these will affect British plants and workers,’ Mandelson said. ‘If the right long-term sustainable solution is identified, then the government would be willing to support this.’
The impact on consumers of this sudden turnaround is yet to be revealed. But in the meantime it’s business as usual in Vauxhall showrooms.
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