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
ebooks
ebooksAn introduction to the ground rules of British democracy
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

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Day In a Page

John Palmer: 'Goldfinger' of British crime was murdered, say police

Murder of the Brink’s-MAT mastermind

'Goldfinger' of British crime's life ended in a blaze of bullets, say police
Forget little green men - aliens will look like humans, says Cambridge University evolution expert

Forget little green men

Leading evolutionary biologist says aliens will look like humans
The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

The Real Stories of Migrant Britain

An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

Dying dream of Doctor Death

Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy
UK heatwave: Temperature reaches 39.8 degrees on Central Line - the sweatiest place in London

39.8 degrees recorded on Tube

There's hot (London) and too damn hot (the Underground). Simon Usborne braved the Central line to discover what its passengers suffer
Kitchens go hi-tech: From robot chefs to recipe-shopping apps, computerised cooking is coming

Computerised cooking is coming

From apps that automatically make shopping lists from your recipe books to smart ovens and robot chefs, Kevin Maney rounds up innovations to make your mouth water
Jessie Cave interview: The Harry Potter star has published a feminist collection of cartoons

Jessie Cave's feminist cartoons

The Harry Potter star tells Alice Jones how a one-night stand changed her life
Football Beyond Borders: Even the most distruptive pupils score at homework club

Education: Football Beyond Borders

Add football to an after-school homework club, and even the naughtiest boys can score
10 best barbecue books

Fire up the barbie: 10 best barbecue books

We've got Bibles to get you grilling and smoking like a true south American pro
Wimbledon 2015: Nick Bollettieri - Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power

Nick Bollettieri's Wimbledon Files

Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power
Ron Dennis exclusive: ‘This is one of the best McLaren teams ever – we are going to do it’

‘This is one of the best McLaren teams ever – we are going to do it’

Ron Dennis shrugs off a poor start to the season in an exclusive interview, and says the glory days will come back
Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most