David Prosser: Vauxhall can drive a hard bargain

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The Independent Online

Outlook Damn those sneaky Germans and their attempts to stitch up British workers. We all know what Angela Merkel and friends have been telling bidders for GM Europe – look after German employees, make your job cuts in the UK and we'll back your offer for the company.

At least, that's what Tony Woodley and Derek Simpson of Unite seem to think is going on. In their delightfully unreconstructed world view, the old enemy is conniving to ensure that thousands of workers at Opel, GM Europe's German business, get kept on by a buyer, and that any job losses deemed necessary come from Vauxhall in the UK, which employs 5,000 Brits at plants in Ellesmere Port and Luton.

If only the old certainties of the world really were set in stone in the way Messrs Woodley and Simpson seem to imagine. Dealing with the complexities of an unprecedented collapse in global demand for the car industry is a bit simpler if you only see in black-and-white.

Let's start with a bit of honesty. There are almost certainly going to be job losses at Vauxhall over the coming months and years, but there will also be redundancies in other parts of the GM Europe business. That's what happens when companies are faced with a collapse in demand for their product on a scale never previously seen.

There is no reason, however, to think that Vauxhall will suffer disproportionately in this process – quite the opposite in fact, because any sensible business plan is going to bet on the more efficient parts of the operation. And, when it comes to productivity – the nitty-gritty of how much work staff on the factory floor manage to get through each day – Vauxhall's Ellesmere Port plant, in particular, comes very close to the top of GM Europe's own league of its factories. The German plants, by contrast, are further down the rankings.

This is one reason why GM Europe plans to start production of the new Astra model in Ellesmere Port later this year. Four-fifths of the cars produced will be exported back to mainland Europe – badged as Opel in most cases – but GM has nonetheless chosen to manufacture the model, for which it is has great hopes, in the North-west of England.

As for Luton, there are complications here too. The Vauxhall plant in Bedfordshire shipped its last car in 2002, but continues to produce commercial vehicles. As we know from the near-collapse of rival LDV, the commercial vehicle market is just about the only sector of manufacturing that leaves you wishing you were in the car business. On the other hand, the Luton business is now run as a joint venture with Renault, which means simply closing it down may not be an option for GM Europe's new owners.

Of course, if you take the union's view, the merits of Vauxhall versus Opel may be blown away by the promise of German government loan guarantees in return for job security promises. What's interesting about this issue is the uncharacteristic silence of Lord Mandelson, the Business Secretary, on the subject.

Until the past few days, the British government has said almost nothing about the future of Vauxhall. Yesterday, however, Lord Mandelson was insisting that he has been involved in talks with GM in the US, as well as the bidders for the Europe business, for months. He also said he would be only too happy to step in to support Vauxhall were the Germans to find themselves unable to offer GM Europe a bridging loan until a buyer is finalised.

His intervention tells you two things. First, that by offering a bridging loan just as the Germans looked certain to offer it themselves, Lord Mandelson is as keen as ever to appear the hero. And second, that he has left it so late to get involved publicly, that he probably isn't too worried about British jobs for now – his political antennae are too finely tuned to have not launched a public campaign otherwise.

Naturally, it suits Unite and its colleagues in the trade union movement to complain that Britain's labour laws make workers here more vulnerable to cuts than their opposite numbers in Germany. Ironically, though, the labour market reforms Britain has made and maintained over the past 20 years may turn out to be Vauxhall workers' best defence. It is these reforms that have enabled the productivity gains which should make Ellesmere Port, at least, indispensable to whoever finally ends up owning GM Europe.