The Government has made a last-minute appeal to the car-maker GM not to close its Vauxhall plant in Ellesmere Port, Cheshire, in an attempt to prevent the loss of the 2,100 jobs there.
Vince Cable, the Business Secretary, returned yesterday from a flying visit to New York, where he pleaded with GM bosses to spare Ellesmere Port when the global car giant slims down its European operations shortly. His decision to travel to the US reflects his serious concern that the plant could be at risk.
UK industry analysts believe GM will combat over-capacity in Europe by axeing two plants – possibly one in Bochum, Germany, and another in either Spain or Britain, which leaves the Cheshire factory vulnerable. "We could be at the sharp end of it," one analyst said. A closure announcement would be damaging for the Government, es-pecially as it could be made around the time of the Budget on 21 March. Amid signs that the UK may escape a double-dip recession, George Osborne, the Chancellor, will set out measures to boost growth, including a credit easing scheme to provide loans to small and medium-sized firms.
Ministers would blame the ending of car production at Ellesmere Port on global factors beyond their control. GM has shed thousands of jobs in America and is now said to be ready to "bite the bullet" in Europe to stem losses on the Continent which rose to £468m last year.
But such a high-profile closure would be a huge setback for the Government as it tries to show that the country is finally emerging from the shadows of the downturn. As well as threatening the 2,100 jobs at the plant, others among suppliers would also be at risk. GM has dismissed fears about Ellesmere Port as "speculation." There is a legally-binding agreement with the trade unions to support production there until 2014, although that would not necessarily prevent a closure being announced this month, with car-making run down over the next two years.
Roger Maddison, national officer for the Unite trade union, said last night: "Ellesmere Port is the most efficient plant in GM's European family, and the UK is their biggest market. There is not one iota of business logic in closure and that is the case we will be making stridently to GM and their shareholders."
Mr Cable had what aides called "a very constructive meeting" in New York with Dan Akerson, GM's chairman and chief executive, and Steve Girsky, the group's vice-chairman. The company is bound to be lobbied by other European governments anxious to save their plants from the axe but Britain is the first to hold such talks.
The Business Secretary stressed the good performance levels of the UK car industry and the facilities and expertise Britain could offer such as research and development. He pointed out that other car-makers such as Ford, BMW, Jaguar Land Rover and Nissan had given the UK a vote of confidence and argued that the country offered a capability not seen elsewhere in Europe.
One source said: "Both Mr Girsky and Mr Akerson were engaged and receptive. They were pleased that Vince Cable had gone to New York to make the case to them in person. Vince Cable also made a strong case for them to make a long-term commitment to the UK as others are doing. Investments from the automotive sector in the UK have been worth over £4bn in the past 18 months alone."
A government source added: "They are going to take a hard-headed decision based on the facts and the bottom line."