Blog: Dave LeggettVauxhall plants speculation

Dave Leggett | 4 June 2009

The state of flux that GM's European operations are currently in is bound to generate plenty of speculation about where the new owners (by the way, not a done deal, by a long chalk) will seek to make savings. So, a politically driven deal in Germany means the axe is less likely to fall there and more likely to descend on European operations in other countries? Maybe, but one thing's for sure - it won't be straightforward.

I found myself on a Liverpool radio station earlier this week being quizzed on this.

Some commentators believe that UK plants are particularly vulnerable. I'm not so sure. Vauxhall's Ellesmere Port plant worked hard to secure the upcoming new Astra. That meant raising productivity and I would guess that the plant stacks up pretty well against others in GM Europe on cost grounds. It has also received investment for the new Astra which is scheduled to start production in September. Moving production somewhere else at this late stage would be costly.

Another point is that the UK market is a big one for GM Europe. Apart from the political ramifications of closing operations here, there's a 'natural hedging' benefit from having a slice of production for the UK market here in sterling land rather than in the eurozone.

And the Luton IBC plant (once 'home of the Cavalier') where they make vans in collaboration with Renault? Luton might have been more vulnerable under Fiat, Fiat able to readily replace the Movano/Vivaro van products with its own made elsewhere. However, it would likely not be as straightforward under Magna to end van production at Luton. When the due diligence people run the rule over the books, it may turn out that IBC is actually a sensible business arrangement that only a madman would upset.

There will be people having to do some serious work over the next few months to enable the Magna-led Opel/Vauxhall deal to be completed. It won't be a cakewalk.

And I wonder what the small print on the jobs/plants guarantees given to the German government looks like.

Shuffling the pack when the deck of cards is that complex has to be done pretty carefully. Uncertainties abound, of course. And be wary of easily drawn superficial assumptions. It's rarely so simple. 


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