Pay freeze in deal to save car plants

A deal to secure the future of Vauxhall's two UK plants has been agreed with the car giant's new owner, in return for cost savings including a two-year pay freeze, it was announced today.

Unite said the agreement with Canadian car parts firm Magna removed the uncertainty surrounding the factories in Ellesmere Port and Luton, which employ around 5,500 workers.

Both plants will be given job security and a future through to 2013, providing a good basis for a long-term future beyond that, said the union's joint leader, Tony Woodley.

Up to 600 jobs could be cut through voluntary redundancy, but unions had originally feared that at least 1,200 jobs would be axed.

Unite said the agreement was reached after weeks of extensive negotiations, describing it as a fairer deal for the UK.

Officials had expressed fears for the long-term future of the factories after the German government offered billions of pounds in guarantees to help secure jobs in Germany.

Mr Woodley said: "This agreement removes the uncertainty surrounding our plants and our people's jobs.

"It gives both plants job security and a future through to 2013, providing a good basis for a long-term future beyond that.

"Production at Ellesmere Port will grow significantly from the level originally proposed to nearly 148,000 units, with full capacity over two shifts, and there is agreement that Luton will remain a key manufacturing site.

"Some 600 jobs that would otherwise have been lost will be preserved, but equally as important, Magna has agreed to no enforced redundancies.

"Agreement has now been reached with the workforce in this country. We would urge that each and every government involved in the European operations, including that in the UK, now wastes no time in finalising the financial contribution which they will make to this business."

Unite's other joint leader, Derek Simpson, added: "When we started off this process, we made it clear that we were seeking a fairer arrangement for the UK plants, and that is what has been achieved.

"The UK Government, chiefly the Prime Minister and Lord Mandelson, has been pivotal to reaching agreement today. Their support has ensured we can preserve and maintain the 25,000 jobs in manufacturing and services and the 403 components companies which depend on Vauxhall, and would have been at serious risk had agreement not been reached.

"This is testimony to the success of the Government's approach, which is not to stand idle and let the market prevail but to intervene to protect the best in British industry.

"Unite thanks them for their work because through their efforts they have made sure that our plants can have a future."

Unite said that, under the deal, Ellesmere Port will produce the next generation Astra, set for 2016, subject to maintaining its competitive position.

The Luton van plant will be maintained as a key site within Magna's UK portfolio, and the Canadian firm will seek "any other possibility on product" for the plant, said Unite.

There will be no compulsory redundancies at either UK plant.

In return, the workforce will contribute through cost-saving and efficiency measures, including a two-year pay freeze - although weekly working hours will rise, helping to bridge the earnings gap.

Mr Woodley had warned that without an agreement on future funding, both UK factories could close within six years.