Vauxhall has held secret talks with Downing Street to seek financial guarantees that could save thousands of jobs in Britain as the carmaker’s American parent teeters on the brink of collapse.
The Times has learnt that the vehicle manufacturer, which employs around 5,000 workers at plants in Merseyside and Luton, approached Lord Mandelson, the Business Secretary, last week along with other carmakers, to urge the Government to give guarantees offering financial comfort to its car-part suppliers and dealerships. The move marks the first time that a company outside the banking sector has approached the Government for financial help since the credit crisis erupted 18 months ago.
Follow-up meetings with Lord Mandelson’s officials are believed to have involved representatives from other car manufacturers with UK plants, including Ford and Honda, which are anxious not to be put at a competitive disadvantage.
The Times understands that the Government is likely to take a cautious approach to any bailout requests, unwilling to allow Vauxhall to become the Northern Rock of the motor sector. While the Business Secretary may authorise short-term measures such as limited bridging loans on commercial terms, it does not want to repeat the sector-wide rescue of the industry seen in the 1970s.
EU rules would normally preclude state aid to car manufacturers. However, officials in Brussels are under pressure not to block emergency financial arrangements that safeguard jobs during the recession.
The future of Vauxhall hangs in the balance as its American parent — General Motors – begs for an immediate $3 billion loan from Washington to stay afloat. Car sales have collapsed in the US with sales of GM cars down 41 per cent in November.
Rick Wagoner, the chief executive of GM, warned Washington this week that without an $18 billion loan, of which $3 billion must be made available immediately, the carmaker will have to file for Chapter 11 bankruptcy protection to buy time to stave off creditors while it slashes costs and tries to work out how to survive.
Vauxhall and Opel, another GM subsidiary in Europe, are believed to be in a more vulnerable position because of growing opposition in America to the use of taxpayers’ money to prop up ailing foreign businesses.
Executives at Vauxhall have been preparing for the worst-case scenario and have drawn up contingency plans that include both outright redundancies and shortening the working week. The company has two main manufacturing plants in the UK – Ellesmere Port, which makes the Astra, and Luton, which manufactures the Vivaro van.
Vauxhall employs around 5,000 workers in Britain, but estimates that the collapse of the company would affect 50,000 workers employed by part suppliers, dealerships and local businesses that cater for the factories.
Courtesy: Times Online
The Times has learnt that the vehicle manufacturer, which employs around 5,000 workers at plants in Merseyside and Luton, approached Lord Mandelson, the Business Secretary, last week along with other carmakers, to urge the Government to give guarantees offering financial comfort to its car-part suppliers and dealerships. The move marks the first time that a company outside the banking sector has approached the Government for financial help since the credit crisis erupted 18 months ago.
Follow-up meetings with Lord Mandelson’s officials are believed to have involved representatives from other car manufacturers with UK plants, including Ford and Honda, which are anxious not to be put at a competitive disadvantage.
The Times understands that the Government is likely to take a cautious approach to any bailout requests, unwilling to allow Vauxhall to become the Northern Rock of the motor sector. While the Business Secretary may authorise short-term measures such as limited bridging loans on commercial terms, it does not want to repeat the sector-wide rescue of the industry seen in the 1970s.
EU rules would normally preclude state aid to car manufacturers. However, officials in Brussels are under pressure not to block emergency financial arrangements that safeguard jobs during the recession.
The future of Vauxhall hangs in the balance as its American parent — General Motors – begs for an immediate $3 billion loan from Washington to stay afloat. Car sales have collapsed in the US with sales of GM cars down 41 per cent in November.
Rick Wagoner, the chief executive of GM, warned Washington this week that without an $18 billion loan, of which $3 billion must be made available immediately, the carmaker will have to file for Chapter 11 bankruptcy protection to buy time to stave off creditors while it slashes costs and tries to work out how to survive.
Vauxhall and Opel, another GM subsidiary in Europe, are believed to be in a more vulnerable position because of growing opposition in America to the use of taxpayers’ money to prop up ailing foreign businesses.
Executives at Vauxhall have been preparing for the worst-case scenario and have drawn up contingency plans that include both outright redundancies and shortening the working week. The company has two main manufacturing plants in the UK – Ellesmere Port, which makes the Astra, and Luton, which manufactures the Vivaro van.
Vauxhall employs around 5,000 workers in Britain, but estimates that the collapse of the company would affect 50,000 workers employed by part suppliers, dealerships and local businesses that cater for the factories.
Courtesy: Times Online
No comments:
Post a Comment