Vauxhall celebrates as union agrees deal to protect jobs

Paperwork signed this week with no staff to face compulsory redundancy

The protracted sale of General Motors' European division, including Vauxhall in the UK, seemed to be drawing to a conclusion last night as union negotiators and ministers celebrated reaching a deal with Vauxhall's new owner, the Canadian car parts maker Magna International.

In Britain, at least, there will be no compulsory redundancies. Up to 600 jobs could be lost through voluntary redundancy, but the unions originally feared that at least 1,200 jobs would be cut after GM Europe was formally put up for sale in May.

As late as Monday, the future of the deal was still hanging in the balance as the British and Spanish governments threatened to wreck the sale because it favoured GM Europe's Opel plants and workers in Germany.

The outcome appears to be a triumph for ministers, led by Lord Mandelson, the Business Secretary, in the face of what seemed to be a done deal between the government of the German Chancellor Angela Merkel and Vauxhall/Opel's US parent company, which was itself recently restructured. Such an arrangement would have fallen foul of EU competition rules.

Yesterday, the GM chief executive Fritz Henderson said it was "quite possible" that the deal would be signed this week. Roland Koch, the Prime Minister of the German state of Hesse, where Opel's headquarters and main factory is located, confirmed that GM was "expected to sign the deal" on Thursday.

Lord Mandelson said: "We now have a much better outcome than we originally had, but we still have some way to go in agreeing the financing of this and that's what talks will be continuing about."

GM will sell a 55 per cent stake in its former European operations to Magna, with €4.5bn in loan guarantee from the German government. Vauxhall said in a statement: "Following extensive and constructive dialogue between Vauxhall Motors, Magna International, the Unite union and the British Government, we are pleased that the parties have secured an agreement that protects the jobs and prospects of the 5,000 Vauxhall employees in the UK.

"Both the Ellesmere Port and Luton manufacturing operations will retain security of production, increased in the case of Ellesmere Port to 148,000 on two full shifts, and at Luton, [which will be] maintained as a key manufacturing operation until at least 2013 with consideration being given to a future model at the plant beyond that date. There will be no enforced redundancies."

The crucial new Vauxhall Astra model went into production at Ellesmere Port recently and received positive reviews in the motoring press last week. The van plant at Luton, which makes vehicles for Renault-Nissan, including its Vauxhall-badged versions, has been most in jeopardy, but the possibility of a new contract beyond the current run gives workers more hope than seemed possible a few weeks ago.

Magna beat off rival bids for GM Europe from the private equity group RHJ and Fiat – deals that might have resulted in even more job losses. The Ontario-based Magna leads a consortium containing several prominent Russian interests, including those owned by the oligarch Oleg Deripaska. The GAZ auto group and Sberbank are part of the collective. Longer-term concerns persist that the eventual outcome will nonetheless see output and technology transferred eastwards.

Tony Woodley, the joint general secretary of Unite, said production at Vauxhall's Ellesmere Port plant would "grow significantly" to almost 148,000 vehicles per year and its Luton factory would remain "a key manufacturing site". Last night, it was unclear whether a new electric Vauxhall car, codenamed Ampera and based on the forthcoming GM Chevrolet Volt, would be made at Ellesmere Port.

Mr Woodley added: "This agreement removes the uncertainty surrounding our plants and our people's jobs. 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: "The Government, chiefly the Prime Minister and Lord Mandelson, has been pivotal to reaching agreement today."

Concerns now centre on GM Europe's other sites at Zaragoza in Spain and Antwerp in Belgium, both of which have been mentioned as candidates for downsizing or closure. British workers will also be expected to make sacrifices. Apart from the voluntary redundancy programme, "cost saving and efficiency measures" will be implemented, including a two-year pay freeze.

The completion of the Vauxhall/ Opel deal comes swiftly after the sale of GM's Hummer brand to China, and the announcement that its value-for-money Saturn division in the US is to close. Saab, meanwhile, was hived off from the rest of GM Europe and sold to a consortium led by the Swedish sports car maker Koenigsegg.