GM sees 'significantly' fewer Vauxhall job cuts

Restructuring plan will be 'no worse' than Magna's / Unions welcome 'positive' talks on future of UK plants

General Motors raised union hopes that there could be fewer redundancies at Vauxhall now the US parent company has decided not to sell the historic car marque.

Meetings between GM executives, the Government and trade unions yesterday were described as "positive" by all sides. The talks were the first opportunity for the players, who had spent months negotiating the sale of GM's European operations to Magna International of Canada, to meet Nick Reilly, the GM executive transferred to the head the division and to draw up the alternative way forward.

There were noticeably optimistic signals for the UK from GM yesterday. Mr Reilly said the group's initial position with regards to potential job losses is "no worse" than the proposals from Magna. He also said that there is the "opportunity to reduce, probably quite significantly" the number of voluntary redundancies from the 800 outlined by Magna for the Ellesmere Port and Luton plants.

But despite repeat commitments of funding from Lord Mandelson, the Business Secretary, it will be three weeks at least before the details of the €3.3bn (£2.9bn) restructuring plan – and what it means for UK jobs and factories – are made public.

Lord Mandelson and trade union bosses from Unite were just one stop on a Europe-wide itinerary for Mr Reilly, who is hawking the company's plans around all the governments and trade unions that need to support it.

The company needs to cut between a fifth and a quarter of the capacity of its loss-making Vauxhall/Opel business. But until there is unanimous agreement, and GM has raised the necessary funding in the form of loans or loan guarantees, the company will give no indications of where the expected 10,000 jobs cuts will fall or which countries might face factory closures.

"I would hope that manufacturing in the UK is maintained and I would include both Ellesmere Port and Luton in that statement," Mr Reilly said. "UK manufacturing strength is strategically good for us and they are good plants." The €3.3bn that GM needs will pay for the restructuring costs, help the company to weather what Mr Reilly acknowledges will be "a tough year" in 2010, and give the company enough cash to keep investing.

The company is keen to stress that there is no bidding war between European governments hoping to buy a reprieve for domestic jobs or factories. "The funding is only short-term and we would expect to pay it back in two or three years as the market picks up," Mr Reilly said. "So we are looking for a funding package that makes sense and we are not going to allocate certain volume to a country if they give more loans or vice versa."

Following yesterday's discussion, the UK government was bullish about the future for Vauxhall. Lord Mandelson said: "We will continue our discussions, but the future for Ellesmere Port and Luton looks positive. GM will be looking for financial support and the UK is prepared to underwrite it."

There is also the potential for GM to put some of its own money into the plan for Vauxhall/Opel. Before and during the bankruptcy of the US company, none of the funding provided by the US government was allowed to leave the country. But since GM came out of Chapter 11 bankruptcy protection in July, some flexibility has been granted – not least because the US government, as a 60 per cent shareholder, wants the best outcome for the company. GM has already been to Germany to discuss the restructuring plan, despite a war of words with German politicians in the aftermath of its U-turn.

Nick Reilly: GM's man with a plan

British-born Nick Reilly is not only the man charged with putting together the plan to re-structure GM's European business and turn it from a loss-making dead weight into a lean and profitable powerhouse – a task that will draw heavily on his highly reputed skills as a negotiator and his grasp of GM's business in international markets. Mr Reilly is also GM's president of international operations and a former managing director of Vauxhall.

Cambridge-educated Mr Reilly already has more than three decades with GM under his belt, including 15 years at Vauxhall in the 1980s and 1990s that included a spell as director of manufacturing at the Ellesmere Port factory and culminated in five years as chairman and managing director. From there, he moved to Zurich before heading for Asia, first to Daewoo in South Korea and ultimately, from July, as the Shanghai-based head of international operations.

Mr Reilly was called on to run the European business last week, pending the recruitment of a replacement for Carl-Peter Forster, the former boss who left in the wake of GM's U-turn on the plan to sell the European arm to Magna.