General Motors to retain Vauxhall/Opel

General Motors to retain Vauxhall/Opel

General Motors is to retain ownership of Vauxhall/Opel with the giant manufacturer's directors promising to "initiate a restructuring of its European operations in earnest". The surprise U-turn was announced following a six-hour board meeting in Detroit.

In a statement the board said that it had decided to walk away from a deal with the Canadian company Magna International, which had resulted in significant political wrangling across Europe, due to an "improving business environment for GM over the past few months" and the "importance of Opel//Vauxhall to GM's global strategy".

GM president and CEO Fritz Henderson said: "GM will soon present its restructuring plan to Germany and other governments and hopes for its favourable consideration. We understand the complexity and length of this issue has been draining for all involved. However, from the outset, our goal has been to secure the best long term solution for our customers, employees, suppliers and dealers, which is reflected in the decision reached. This was deemed to be the most stable and least costly approach for securing Opel/Vauxhall's long-term future."

On a preliminary basis, the GM plan entails total restructuring expenses of about €3 billion, significantly lower than all bids submitted as part of the investor solicitation.

GM says it will work with all European unions to develop a plan for meaningful contributions to the restructuring. While Vauxhall/Opel continues to outperform against its viability plan assumptions and immediate liquidity is stable, time is of the essence, said the GM statement.

Mr Henderson added: "While strained, the business environment in Europe has improved. At the same time, GM's overall financial health and stability have improved significantly over the past few months, giving us confidence that the European business can be successfully restructured."

A GM Europe statement added that the directors' decision underlined that Vauxhall/Opel had a key role to play in the parent company's global strategy. The statement added: "In the interest of Vauxhall/Opel, all parties will work to safeguard a successful future for the two brands."

Business Secretary Lord Mandelson, who has been closely involved in the political talks to safeguard the future of Vauxhall, which employs more than 5,000 workers in the UK at plants in Luton and Ellesmere Port, said: "I am keen for very early discussions with GM over their plans for the business and how they will affect British plants and workers. I have always said that if the right long term sustainable solution is identified, then the Government would be willing to support this."

GM's decision was immediately welcomed by Tony Woodley, a former Vauxhall worker and joint general secretary of the Unite union. He said: "This is an incredible turnaround from General Motors. I am absolutely delighted with this news. It is fantastic news for the UK and right that General Motors does not break up its family and instead retains ownership of Vauxhall. The problems for General Motors were rooted in the US, not in the UK where our plants restructured themselves years ago, becoming the best and most efficient in Europe.

"In terms of securing the best future for Britain's plants, we want Vauxhall to be part of a giant global company, one which is now successfully restructuring thanks to [President] Obama's intervention. Far better to remain within the experienced General Motors group than be spun off to Magna which simply does not have the expertise to run a global car company. This is a massively significant development and a far better deal for Britain. We expect our government to do all it can to support it."

However, the German government, which had strongly backed the sale of Vauxhall/Opel, and had been involved in months of tough negotiations, were highly critical of the change of mind and demanded that GM repaid a €1.5 billion loan. German Economy Minister Rainer Bruederle said: "We will get back taxpayers' money." Many unions in Germany also said workers would begin walk-outs from today to protest about the reversal.

Newspress, General Motors, Department for Business, BBC, FleetNews

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Date Updated:5th Nov 2009

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