UK 'Confident' About Vauxhall Future

Britain's business minister says he is confident that Vauxhall, the British unit of General Motors Corp., will remain in business under a new owner.

LONDON (AP) -- Britain's business minister said Thursday he is confident that GM's U.K. unit Vauxhall will remain in business under a new owner, but a labor union said the government needs to get more involved in talks to secure the automaker's future.

Although Business Secretary Peter Mandelson said he expects some job losses, he added that bidders for General Motors Corp.'s European operations have assured him they would continue to produce Vauxhall vehicles here.

"Vauxhall's production in the United Kingdom provides one of the main revenue and profit streams for General Motors Europe," Mandelson said in an interview with the British Broadcasting Corp. "There's no question of that simply being dispensed with."

He said he has been in frequent telephone contact with the two remaining bidders, Italy's Fiat Group SpA and Canadian auto parts maker Magna International Inc. However, he took no part in talks between the bidders and the German government, which has taken a lead in efforts to save GM Europe.

"The most important thing for me is that our government are not just calling on the phone, but they are also at the negotiating table themselves," said Tony Woodley, joint general secretary of Unite, which represents Vauxhall workers.

"If we are not... common sense tells you the ax will fall outside Germany, outside Spain and outside Belgium," Woodley said.

All-night talks hosted by German Chancellor Angela Merkel broke up Thursday without agreement.

The European Commission scheduled a meeting on Friday to coordinate efforts by all affected governments, which also includes Belgium, France, Italy, Austria, Poland, Sweden, Spain, and Hungary.

David Bailey of Coventry University Business School shared Woodley's belief that the British government should be more active.

"They should have been involved much earlier, and they should have been negotiating to keep Vauxhall part of GM," Bailey said in a telephone interview.

"Unfortunately, they missed that opportunity, it's been lumped with Opel."

Vauxhall has two plants in Britain, employing about 5,000 workers.

Bailey said Vauxhall workers may be more vulnerable in a reorganization because it is relatively cheaper to fire employees in Britain than on the continent.

Britain promotes itself as having a flexible job market, Bailey said. "In a downturn, it's a very flexible place to fire workers," he said.

Howard Wheeldon, senior strategist at BGC Partners, said he believed Vauxhall's auto plant at Ellesmere Port was reasonably secure, but he was pessimistic about the survival of the van plant in Luton.

The cost of firing workers may be a factor in restructuring GM's various European operations, said Howard Wheeldon, senior strategist at BCG Partners, but "I don't think that's the issue here."

"Any responsible taker of GM's European assets will have to look at the complete state of play. I have been around the four Opel factories, and I have been at Ellesmere Port, and it is a very highly invested, workable plant."

He noted that Ellesmere Port won out over other GM plants to produce the new Astra model.

"Are you going to close a factory that is highly productive? Adding it all up, I think the Ellesmere Port plant is very safe," Wheeldon said.

More in Operations