UK: Ailing Vauxhall asks for state cash
At least £5m in government cash will be needed to ensure that the Ellesmere Port plant wins work building 180,000 new-style Vectra cars a year from 2002, the BBC reported Vauxhall chief executive Nick Reilly as saying.
The plant, in the north west of England, is bidding against a sister factory in Antwerp, which has put in a bid lower by £14-15m for the work, Mr Reilly told a committee of MPs who visited the Luton Vectra plant yesterday. The site will close at the end of the current model's production run in 2002, with the loss of about 2000 jobs.
GM is set in four to six weeks to announce its decision, Mr Reilly told the BBC. He has pleaded with officials from the UK Department for Trade & Industry for aid to help him underbid Antwerp for the work.
"The [DTI officials] understand the situation and are going through their usual rather exhaustive analysis," he said. "We have told them we have not got too long."
Winning the work would be a valuable boost to Vauxhall whose parent company General Motors is cutting costs in response to a profits slump, particularly in Europe where it also markets cars under the Opel brand.
"GM Europe is in significant financial difficulties, as is the automotive industry generally in Europe," Mr Reilly told the BBC.
Almost 600 jobs in UK firms directly supplying Vauxhall will go if the Vectra work is lost, said Mr Reilly, who was appearing before a special session of the Commons trade & industry committee in Luton.
Vauxhall hopes its job losses can be undertaken without compulsory lay-offs, thanks to the offer of an "enhanced" voluntary severance package to Luton workers.
But Mr Reilly faced accusations that GM's UK operations are suffering an unfairly high proportion of the 5,000 job cuts GM has announced throughout Europe, the BBC said.
According to trade unions, liberal UK labour rules make it easier to lay off workers here than on the Continent.
"If Britain had similar laws to Germany and France, workers in Luton would not find themselves in this dire situation," Terry Pye, national secretary of the Manufacturing Science and Finance union, said at the hearing.
But Mr Reilly said that GM's German operations, where production numbers will be cut by 200,000 vehicles a year, would suffer even more.
"Certainly job losses are greater there," he said.