[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Tuesday, 17 April 2007, 17:16 GMT 18:16 UK
GM Europe still faces major challenges
By Jorn Madslien
Business reporter, BBC News

Concerns about the future of General Motors' (GM) car factory in Ellesmere Port, Cheshire, have been wiped out by a promise to produce the seventh generation Opel, or Vauxhall, Astra there.

The cars will also be produced at three other factories in Germany, Poland and Sweden.

Vauxhall, Ellesmere Port
Ellesmere Port is set to become the home for the new Astra

"This is fantastic news," says Roger Maddison, national officer of the Amicus trade union.

"We have worked very hard to get to this point and I am delighted that over 2,000 jobs at Vauxhall's Ellesmere Port plant are now secured for the next five or six years [from 2010]," he adds.

The stakes have been high and risks evident as GM looked at ways of cutting costs.

One company official explained that had the announcement gone the wrong way, then the plant in the UK would have closed.

And while workers have cheered in Britain, their joy has been dampened by the despair of their colleagues in Antwerp, Belgium, where hundreds of jobs are now on the line.

Difficult times

GM has long been desperate to reduce its production capacity in Europe, as part of a restructuring plan aimed at cutting costs and bringing about a profit recovery.

Indeed, the contest between five of its European factories to produce the next generation Astra should be seen as part of these efforts.

But victory for four of them still leaves GM with tough decisions about what to do with the fifth.

Carl-Peter Forster, head of GM Europe
Mr Forster accepts it is a bad day for Belgian workers

"It is very important to state that we are not talking about a plant closure in Antwerp," says Jonathan Browning, chairman of Vauxhall Motors and vice-president of GM Europe, which sells the cars under the Opel marque.

"We're talking about reducing production by one shift, equivalent to 1,400 people", or about a third of the workforce, he says.

GM's Europe chief executive, Carl-Peter Forster adds that: "I know that the announcement is very difficult for our employees in Antwerp. We will make every effort to find a socially acceptable way of implementing the job cuts."

No new jobs

Elsewhere in Europe, more than 3bn euros ($4bn; 2bn) will be invested to upgrade the four victorious factories, Mr Browning says, adding that in the UK a third shift, which was cut only last year, is to be re-instated.

In 2007, we'll stay focused on moving from turnaround to transformation
GM boss Rick Wagoner

"This is about getting Ellesmere Port to the right size for the future," he says.

The worry, however, is that when car industry executives look ahead, their horizon is limited.

True, the next generation Astra will be produced in Britain from the end of this decade till the end of its life. But with model life-cycles getting shorter by the day, this only guarantees the factory will stay in business for another five or six years.

Moreover, whilst Mr Browning insists that "this helps us to protect the 2,200 jobs we have here today", he points out that no new jobs will be created in place of the 1,200 jobs that were axed along with the third shift last year.

Indeed, Mr Browning is not even able to guarantee that the existing jobs are safe, insisting that it all depends on how the next generation Astra is received by customers.

New labour

Despite the uncertainty facing the auto industry, the UK government has done its bit to safeguard Ellesmere Port's survival, Mr Browning says.

"These sort of investment decisions are very complex," he says, though he declines to be specific beyond saying that "there's been a tremendous amount of engagement and support".

But both GM and other car makers in Europe believe that the only way to fend off competition from low-cost countries, and thus retain car production in Western Europe, is to improve productivity.

It is widely agreed that the best way to do this is to bring in more robots, more machines and a greater degree of automation to help speed up production, and workers in the car industry have had to become much more flexible in their attitudes to work.

At Ellesmere Port, there has been plenty of change, according to Mr Browning, pointing out that during the last 12 months, productivity has improved 30% and further efficiency improvements are expected.

"The production of the next generation [Astra] will require reduced assembly time and an increase in productivity of 30%," adds Mr Forster.

Moreover, modern car assembly relies heavily on pre-assembly of parts such as entire dash boards with the stereo, the instrument panel and the steering column already built in. These parts are often bought in from suppliers whose factories are often located in countries where salaries are low.

"Ellesmere Port has played its full part in [GM Europe's] turnaround," says Mr Browning.

Yet, despite the British workforce's achievements, it is clear that continuous improvements will be needed for years to come as competition from Asian and East European rivals become fiercer by the day.

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Americas Africa Europe Middle East South Asia Asia Pacific