German vote on GM aid vital to Vauxhall’s future

German vote on GM aid vital to Vauxhall’s future

The future of Vauxhall and Opel will reach a crucial junction this week when the German government votes on whether to provide the car maker with state aid.

 
 

Fears are growing in Germany that Angela Merkel’s government will reject proposals from General Motors’ European arm, placing the fate of 5,000 UK workers in fresh doubt.

German unions are planning to protest in front of the Frankfurt Stock Exchange on Monday in an attempt to put pressure on Ms Merkel, the chancellor, to provide aid.

GM has proposed a €3.9bn (£3.2bn) refinancing for its European arm, with up to €2bn of loan guarentees coming from countries with manufacturing sites.

However, if Germany rejects GM’s request to guarantee 90pc of a €1.3bn loan, the company will have to rethink plans to cut 8,300 jobs, including more than 500 in the UK. Unions fear two out of the four GM plants in Germany would be closed, as well as extra costs cut elsewhere.

Because tumbling sales and the bankruptcy of GM in the US damaged GM Europe’s credit rating, the company needs state guarantees to secure loans for future research and development.

Ms Merkel has become sceptical about providing support for GM Europe because of a recovery in global car sales and the fact Germany is controversially financing a bail-out of Greece.

Union leader Klaus Franz told Reuters: "Compared to the rescue package for Greece, there is a considerably lower likelihood that Opel would ever need to actually draw on taxpayer funds."

A steering committee responsible for German bailouts, which includes Ms Merkel’s economic advisor Jens Weidmann, was due to vote on providing support on Friday, but the meeting was pushed back to an unspecified date next week, giving GM an extra chance to lobby for support.

The expectations are that Germany will not provide aid after a government-commissioned report was "very critical". GM insiders have been confident of securing support, pointing to the fact that many of the car maker’s rivals received loans last year and it did not.

The ability of the US parent, which made $865m (£598.5m) in the first quarter of 2010, to pump more of its own money into Opel and Vauxhall is unclear because of strict restrictions from the Obama administration, the majority owner of GM, about the diversion of funds oversees.

In one of his final acts, Lord Mandelson agreed a £270m UK package of loan guarantees with Nick Reilly, the GM Europe chief executive.

Royal Bank of Scotland is thought to be one of the banks that will provide Vauxhall with the loan.

The new Government is reviewing the Labour’s last spending commitments, but Vauxhall sources say initial meetings with officials from the office of Vince Cable, Business Secretary, suggest aid for Vauxhall will not be axed.

However, the restructuring package is heavily reliant on support from Germany, where 25,000 of GM Europe’s 50,000 staff are based.

Ms Merkel was involved in rescue talks with GM Europe last year ahead of national elections and was understood to be furious when GM pulled out of a sale of its European operations to Magna, the Canadian car parts group.

Vehicle manufacturing in the UK grew in April, despite the end of the scrappage scheme. The number of cars and commercial vehicles produced last month rose 44pc compared with the previous year, according to new figures. However, the percentage increase was the smallest of 2010 so far.

Automotive manufacturing has been increasing since the end of 2009. The scrappage scheme, which ran from May 2009 to March 2010 in the UK, boosted sales and dragged the industry back from the plant shutdowns and job cuts it endured at the height of the recession.

The industry faces a challenging 2010, with global car sales expected to stall following the end of incentive schemes across Europe. In April, though, the number of cars produced for the UK market – both at home and abroad – rose 150.5pc to 30,032 as consumer confidence held firm.

GM and Renault are in talks about signing a new joint venture deal to keep the Luton plant beyond 2013 and are confident of reaching agreement.

Share
Seniority Lists
Recent Posts!
Bargaining Committee

Chairman
Mike Herron
President
Tim Stannard
Zone at Large – 1st
Danny Taylor
Zone at Large – 2nd
Mark Wilkerson
Committeepersons
Joe McClure
Chad Poynor
Steve Roberts
Derek Lewis
Bill Cundiff
Kirk Zebbs
Don Numinen
Jay Minella
Danny Bragg
Chris Hill
Rashad Thomas
Keith Oswald
Chris Brown

1853 Officers

President
Tim Stannard
Chairman
Mike Herron
Vice President
Darrell DeJean
Financial Secretary
Mark Wunderlin
Recording Secretary
Peggy Mullins
Trustee (3)
Jay Lowe
Dave Clements
Dave Spare
Sgt. at Arms
David C Spare
Guide
Ashley Holloway
E-Board at Large (2)
David Ryder
Steve Roberts
GM Unit Chair
Mike Herron
Leadec Unit Chair
Larry Poole
Ryder Unit Chair
Patrick Linck
AFV Unit Chair
Neil Osborne
Retiree Chair
Mike Martinez

Get Text Alerts



asdasdsd

*Standard text messaging rates may apply from your carrier