Blow for UK workers as Vauxhall to be sold

General Motors has decided to sell its European arm, including Vauxhall, to Canadian car parts firm Magna, the German Chancellor announced today.

Angela Merkel told a news conference in Berlin the move was the outcome the German government had been working towards as it fought to preserve the firm's 25,000 jobs and four plants in Germany.

The decision is a blow to unions in the UK which have warned about possible job losses among 5,500 workers at Vauxhall's plants in Luton and Ellesmere Port if Magna was successful.

Sources had suggested earlier today that the GM board was set to decide not to go ahead with a sale, which would have eased fears of UK job losses.

But later speculation said GM had decided to sell its European arm to Magna, which is backed by Russia's Sberbank, a move confirmed by the German Chancellor.

Business minister Pat McFadden said: "Our objective throughout has been to get the best possible outcome for the Vauxhall workforce and the production plants in the UK.

"We have been in close contact with all parties throughout, including GM in the US and Europe, and all the potential bidders.

"Now GM has announced its preferred bidder is Magna. We will now continue our discussions with Magna: they have told us of their commitment to continuing production at both Ellesmere Port and Luton and we will work to make sure we get the best possible outcome for the UK."



Unite's joint general secretary Tony Woodley said: "The uncertainty surrounding the ownership of Vauxhall is now over, but the uncertainty surrounding the long-term future of Britain's plants will continue.

"One of the alternatives could have been the unthinkable position of liquidation.

"Nevertheless, with Magna as the new owner, we need to make sure that British plants and people are not treated disproportionately during the re-structuring that will take place. With that in mind, the union and the Government will no doubt continue to negotiate with Magna.

"We expect financial support from the UK Government for Magna to be dependent on the job and plant commitments given by the company."

Unions had been pressing GM not to sell its European business, believing this would be the best option for securing jobs in the UK.

Chancellor Merkel said "patience and resilience" during discussions had led to the sale decision being reached.

The decision has to be ratified by the Opel Trust, made up of representatives from GM, the German federal government and the German states that contain Opel plants, which is expected to announce its views later.

A rival offer for the business was made by Belgian investment group RHJ.



GM confirmed its board had recommended selling a majority stake of 55 per cent in Opel/Vauxhall, with employees holding a 10 per cent stake.

President and chief executive Fritz Henderson said: "Several key issues will be finalised over the next few weeks to secure the binding agreements, including the written support of the unions to support the deal with the necessary cost restructuring for viability and the finalisation of a definitive financing package from the German government.

"The definitive agreements should be ready to sign within a few weeks, with closing to follow within the next few months. Under the deal, Magna/Sberbank will purchase a 55 per cent stake in New Opel, GM will hold a 35 per cent stake and employees will be provided a 10 per cent stake.

"The hard work over the past two weeks to clarify open issues and resolve details in the German financial package brought GM and its board of directors to recommend Magna/Sberbank.

"We thank all parties involved in the intensive process of the last few months - especially the German government -for their continued support that enables this new venture. I'd also like to thank the Opel and Vauxhall customers for their continued loyalty. GM will continue to closely collaborate with Opel and Vauxhall to develop and produce more great cars, such as the new Insignia and the new Astra."

GM said the agreement will keep Opel/Vauxhall a fully integrated part of the firm's global product development organisation, allowing all parties to benefit from the exchange of technology and engineering resources."

"The new ownership structure constitutes a new lean, efficient and independent organisation for the Opel and Vauxhall brands. The current portfolio of Opel/Vauxhall cars and the models in the pipeline are a strong basis for future success," GM said in a statement.

John Smith, GM Group Vice President Business Development, added: "GM operates many joint ventures around the world and has proven in the past that this business model delivers the right balance of independence, innovation and synergies. All parties will work hard to close the deal as soon as possible."

The German government has been backing the joint bid from Magna and Russian bank Sberbank, offering almost £4 billion of finance.

Berlin championed the Magna bid because it involved guarantees not to shut down German plants, which employ 25,000 workers, but UK ministers have been pressing for a "commercial" decision to be made rather than one influenced by politics.

GM was considering the sale under moves to return to a firmer financial footing after emerging from US bankruptcy.

Start your day with The Independent, sign up for daily news emails
News
Kim Wilde began gardening in the 1990s when she moved to the countryside
peopleThe singer is leading an appeal for the charity Thrive, which uses the therapy of horticulture
Sport
Alexis Sanchez celebrates scoring a second for Arsenal against Reading
football
Life and Style
health
Voices
An easy-peel potato; Dave Hax has come up with an ingenious method in food preparation
voicesDave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
News
i100
News
Japan's population is projected to fall dramatically in the next 50 years (Wikimedia)
news
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
You should judge a person by how they peel a potato

You should judge a person by how they peel a potato

Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Beige is back: The drab car colours of the 1970s are proving popular again

Beige to the future

Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

Bill Granger cooks with fresh cheeses

More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

Shay Given: 'This FA Cup run has been wonderful'

The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
Timeless drama of Championship race in league of its own - Michael Calvin

Michael Calvin's Last Word

Timeless drama of Championship race in league of its own