Mandelson positive over Vauxhall

Lord Mandelson rejected calls to follow the German government's lead in subsidising the car maker

Business Secretary Lord Mandelson says he is upbeat about the future of the UK Vauxhall plants after they were taken over by a Canadian firm, Magna.

It has bought the European operations of Vauxhall's owner General Motors.

The move prompted fears among the workforce that the factories at Luton and Ellesmere Port will close.

Lord Mandelson acknowledged there were likely to be job losses but said he believed the new owners were committed to keeping the plants open.

He said: "All the workforce, throughout the entire company in Europe will face some restructuring. There's never been any question about that.

"But if you're asking me whether I believe that the future of the two UK plants are assured, then I have received that assurance from Magna."

Worker uncertainty

On Thursday, unions said General Motors' announcement failed to quell fears of job losses at UK plants.

"Uncertainty surrounding the long-term future of Britain's car plants will continue," said Tony Woodley, general secretary of the Unite union.

Car parts maker Magna said it was committed to keeping Vauxhall's Ellesmere Port plant open. However, doubts remain about the firm's Luton plant.

The two sites account for most of the firm's 5,500 UK workforce.

Magna said it would honour existing contracts at Luton until 2013, but has not given any commitment beyond this point.

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The Luton plant has a contract to build Vivaro vans as part of a deal with Renault but the French carmaker has a clause allowing it to pull out of the contract if there is a change of ownership.

Some observers have criticised the UK government, arguing that it has been outmanoeuvred by its German counterpart, because it has received specific commitments about safeguarding German jobs.

Magna has said it will not close any plants in Germany.

This pledge meant that the German government put pressure on GM to sell Opel and Vauxhall to Magna. It also provided a 1.5bn euro ($2.2bn; £1.3bn) bridging loan to keep Opel operating in recent months.

Last month, it also said it would lend Opel 4.5bn euros if the carmaker was sold to Magna.

Lord Mandelson said there was "British money on the table" should the company need financial support.

"I have had four face-to-face meetings with Magna in the last couple of months. I am satisfied about their commitment to Vauxhall's plants," he added.

"The government will now discuss our share of the funding of the deal and I expect to tie down the details of this in the near future."