Mandelson seeks talks after Vauxhall sale u-turn

The Government was seeking urgent talks with General Motors today after the car giant's dramatic decision to scrap plans to sell Vauxhall, a move welcomed by union leaders.

The GM board decided after a six-hour meeting in the United States not to go ahead with plans to sell its Opel and Vauxhall brands to Canadian car parts firm Magna - a deal which had threatened thousands of jobs across Europe.

President and chief executive Fritz Henderson said the decision to keep Vauxhall followed a more benign business environment in Europe and GM's improved financial health.

The decision will impact on 5,500 workers employed by Vauxhall in the UK, mainly at Ellesmere Port and Luton.

Workers arriving at the plants this morning expressed "cautious optimism" that the U-turn would be better for the long-term security of their jobs.

Business Secretary Lord Mandelson said: "I am keen for very early discussions with GM over their plans for the business and how they will affect British plants and workers.

"I have always said that if the right long-term sustainable solution is identified, then the Government would be willing to support this."

Tony Woodley, joint leader of the Unite union, and a former Vauxhall worker himself, said the move was a "fantastic decision", adding: "There's no logic in breaking up the company. I believe it is the right decision in spite of a good deal that we'd struck with Magna.

"It is the best decision for Britain and our plants. I am absolutely delighted that General Motors have finally done the right thing for them and for us."

John Featherstone, Unite's convenor at Ellesmere Port, told the Press Association he believed there would still be some restructuring in the UK, but unions were generally happy to be dealing with GM.

"Detail is in short supply and we don't know what the immediate effect will be, but I am pleased we will be dealing with GM because we know them and we understand their culture - and they know us.

"I hope Lord Mandelson will now demand that GM gives us guarantees about future production."

Around 2,200 workers are employed at Ellesmere Port, producing the Astra on two shifts, but Mr Featherstone said he hoped the plant could step up to three shifts.

Guarantees about the future of the van plant at Luton will also be sought.

Unions struck a deal weeks ago with Magna which would have led to hundreds of voluntary redundancies.

Despite announcing the sale to Magna, the deal was never signed although it was due to be finalised in the coming days.

Analysts predicted today that two German plants could now close, with the loss of thousands of jobs, as a result of GM's decision.

GM first said in March that it wanted to offload Opel and Vauxhall after running up losses of £24 billion last year.

After exhaustive talks it agreed to sell to Magna in September.

Workers across Europe were concerned that Magna's takeover would give an unfair advantage to Opel's vast workforce in Germany, as their government was willing to hand Magna £4 billion worth of loans.

Mr Henderson added: "From the outset, our goal has been to secure the best long-term solution for our customers, employees, suppliers and dealers, which is reflected in the decision reached today."

Retaining the brand was "the most stable and least costly approach for securing Opel/Vauxhall's long-term future".

He went on: "While strained, the business environment in Europe has improved. At the same time, GM's overall financial health and stability have improved significantly over the past few months, giving us confidence that the European business can be successfully restructured."

Restructuring costs are expected to run to around three million euros (£2.7 million) - significantly lower than the bids submitted, GM said.

The Press Association reported on September 10 that GM was set to retain ownership of its European business.