Page last updated at 15:26 GMT, Sunday, 31 May 2009 16:26 UK

Mandelson 'reassured' on Vauxhall

Lord Mandelson expects 'tough bargaining' ahead

Business Secretary Lord Mandelson says he has received further reassurance about the future of Vauxhall plants in the UK from General Motors.

Lord Mandelson said that GM Europe executives had reaffirmed their commitment that Vauxhall production would continue in the UK.

But the deal to rescue GM Europe could lead to the loss of a key contract for Vauxhall's van plant in Luton.

Union leaders also fear that UK jobs could go.

Mr Mandelson said he welcomed the proposed deal that would see Canadian car parts manufacturer Magna International take control of GM Europe's Vauxhall and Opel brands.

He said that he had received further reassurances about the future of the two plants in Luton and Ellesmere Port, which employ 5,500 people.

We've got now to pin down specific plans and specific implications for jobs
Lord Mandelson

"I have in the last 24 hours spoken again to the senior executives of General Motors in Europe and again I have got their commitment reaffirmed to me - as I did previously, in the previous week with Magna - that their commitment to Vauxhall production continuing in the United Kingdom is firm," he told the BBC's Politics Show.

"But we've got now to pin down specific plans and specific implications for jobs."

He added that Magna had to date been vague both on its plans for the business and the implications for jobs.

But the rescue deal with Magna looks likely to spare GM's European arm from bankruptcy.

GM is expected to file for bankruptcy protection early on Monday in what would rank as one of the biggest bankruptcies in US history.

Luton fear

Lord Mandelson said that Magna's proposal to take over Vauxhall and Opel could threaten a key contract between Renault Nissan and Vauxhall's van making plant in Luton. Renault builds its Trafic van in Luton and the contract is set to run until 2012.

Anxiety among Luton firms grows

He told the BBC that Renault Nissan has a clause in its contract that states that it can renegotiate or even end the agreement with Luton, should the ownership of the plant change - as would be the case if Magna completes its deal to take over GM Europe.

"These are among the many details and specifics of Magna's plans that we have to discuss with them and tie down," Lord Mandelson said.

"If they want British government to help underwrite this new company going forward, they are going to have to demonstrate what's in this new arrangement for Britain, for British production and British workers."

Union fears

Derek Simpson, general secretary of the Unite union, said on Saturday he feared German plants will be saved rather than UK factories because the German government had offered financing.

See GM production centres in Europe

Under the deal struck late on Friday night, the German government will provide an emergency loan of £1.3bn while the European arm of GM is sold to Magna, with investment backing from Russia.

Speaking after the deal was announced, Lord Mandelson said Magna had made it clear it was committed to continued production in the UK.

He added that he would be seeking a meeting to "reinforce that commitment".

But he added: "Of course it will involve change, there is excess capacity."



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