Vauxhall to close UK car plant

General Motors has decided to close its Vauxhall car plant in Luton, Bedfordshire, with the loss of about 2,500 jobs.

The plant had been thought to be one of the most secure in the UK.

This is rapidly turning into UK manufacturing's blackest week.

John Edmonds, GMB union

About 500 of the workers are expected to be transferred to Vauxhall's neighbouring factory making vans, which is not affected.

BBC industry correspondent Stephen Evans says that General Motors in Detroit decided to close the car plant as it reorganises its worldwide operation.

Bolt from the blue

The problem is that the demand for the Vectra, which is made at the plant, is low, and GM has decided to concentrate production of the Vectra's replacement on the continent, primarily in Germany but also in Holland.

The jobs will go over the next 15 months, with workers offered a "very reasonable" redundancy package.

Chairman Nick Reilly said the decision was necessary to retain competitive manufacturing in the UK.

UK government ministers are already prepared for political fall-out - although Vauxhall is not believed to see the high value of the pound against the euro as a factor in the decision.

"Vauxhall's announcement of job losses at Luton is a bitter blow for the individuals affected, their families and the local community," said trade and industry secretary Stephen Byers.

"Our key aim will be to find new job opportunities to replace those being lost over the next year."

Ford has already decided to stop making cars at Dagenham in Essex.

It is understood that Ford's decision prompted General Motors executives to look more closely at a British plant closure, believing that it might be politically acceptable.

There is no valid reason for there to be any talk of this plant closing. It is yet another example of how companies see the UK as an easy place to sack workers

Tony Woodley, TGWU union

Professor Garel Rhys, of Cardiff Business School, said Vauxhall had voiced concerns about sales but had given no hint of taking such drastic action: "It is a genuine bolt out of the blue".

Union leaders reacted with disbelief to the news and said they would campaign to keep car production at Luton.

"We will fight tooth and nail to maintain car assembly," said Duncan Simpson, national officer of the Amalgamated Engineering and Electrical Union.

Tony Woodley, national officer of the Transport and General Workers Union, said there was "absolutely no need" for Vauxhall to end car production at Luton.

Industry weakness

"There is no valid reason for there to be any talk of this plant closing. It is yet another example of how companies see the UK as an easy place to sack workers," he said.

The factory was opened in 1905 - and is at the heart of the local community.

The ending of car production and subsequent job losses will come as a massive blow to the region and ends a difficult year for car manufacturers in the UK.

In addition to the ending of car production at Ford's factory in Essex in 2002, with the loss of thousands of jobs, loss-making Rover also shed thousands of jobs after it was sold by BMW.

Car firms, facing industry-wide overcapacity in Europe, have been hit by the strength of the pound against the euro when exporting UK-made cars to continental Europe.

John Edmonds, general secretary of the GMB union, said: "This is rapidly turning into UK manufacturing's blackest week.

"In the last 24 hours more than 3,500 jobs have been lost in shipbuilding, textiles and car manufacturing.

"The Government must act to prevent the high level of the pound squeezing the life out of Britain's manufacturing heartlands."