Vauxhall workers agree to two-year wage freeze as costs are slashed across Europe

Workers at Vauxhall's Ellesmere Port and Luton plants have agreed to a two-year pay freeze, as part of the German car maker's Europe-wide agreement to slash its labour costs by more than €1bn over the next five years.

Opel/Vauxhall, the European arm of the embattled US car giant GM, plans to save €265m (£230m) a year until 2014, and said it will invest the money in new technology and products, such as a new convertible model and a car smaller than the Corsa.

Nick Reilly, the chief executive of Opel/Vauxhall, said: "It is gratifying to see that both management and employee representatives can work together and share the common vision of a successful future."

The UK operation said there would be "no headcount reductions" at Vauxhall's Ellesmere Port factory on Merseyside, but 369 employees at Vauxhall's Luton plant have taken voluntary redundancy. Of these UK employees, 133 left at the end of last month.

The UK programme will save €26.5m a year, 10 per cent of the European total, including the two-year pay freeze, pension scheme savings and the introduction of a contributory pension.

At Ellesmere Port, the ailing car maker will step up production to three shifts in the morning, afternoon and evening in the first half of 2011 from two at the moment. Alongside the current Astra five-door hatchback and the Astra Van, the UK arm will start producing the Astra Sports Tourer from September 2010.

The company said it was "optimistic" about ongoing talks between Luton's Vauxhall plant and Renault concerning the joint development and production of a new generation of Vivaro vans beyond 2013.

Opel/Vauxhall said the product plan unveiled yesterday builds on its February announcement that it would invest €11bn in initiatives, notably new products and alternative propulsion systems.

A timetable has not been set for the introduction of new models, such as the fresh convertible.

However, Opel/Vauxhall is still waiting for an agreement on €1.9bn loans and guarantees from five European governments, as part of GM's €3.7bn restructuring plan.

The UK Government has already pledged a €300m loan guarantee and the Spanish and Polish governments have given positive indications. A decision from the German government, which has expressed reservations about the burden of its €1.5bn loan guarantee, is expected at the end of May.

For the first quarter of 2010, GM delivered a profit of €863m, compared to a $6bn loss for the same period of 2009. However, GM's European operations suffered a loss of $506m, although this was an improvement on the $814m loss in the first quarter of 2009.