Trade union welcomes General Motors’ decision not to sell Opel

In November 2009, General Motors announced that it would not after all sell Opel and Vauxhall its main European operations, to Magna and Sberbank. The planned sale had been controversial because of perceptions that subsequent restructuring would favour German manufacturing plants and that job cuts would fall disproportionately on plants elsewhere in Europe. The UK trade union Unite welcomed GM’s change of heart, believing that the move would promise a better future for the two Vauxhall plants in the UK.

On 4 November 2009, in a surprise move, General Motors (GM) announced that it would not be selling its Opel European business operations to the Canadian-Austrian car parts supplier Magna International and its Russian partner Sberbank. GM’s decision raises new uncertainty over the future of its plants in various European countries, as well as over the extent of restructuring and its impact on employment (EU0910029I).

Negotiations over restructuring

One casualty of the move were proposed agreements between Magna and GM employee representatives at the national and European levels on securing employment in the various GM plants in Europe, including the two plants of its UK subsidiary Vauxhall. Negotiations about these agreements had started during the summer of 2009 and had reached a critical stage in early September, after GM’s board had made a preliminary recommendation to sell its European operations to the Magna–Sberbank consortium.

From the start, these negotiations were overshadowed by conflicts over the distribution of production and employment cutbacks between the various European GM locations. British government and trade union representatives, alongside their Spanish counterparts, protested against the initial distribution formula in the suggested Magna business plan. They perceived this plan as favouring German plants, thereby reflecting the substantial loan guarantees offered to the Magna–Sberbank consortium by the German government. At a later stage, EU Competition Commissioner Neelie Kroes voiced similar suspicions.

Against this backdrop, the bargaining role of GM’s European Works Council (EWC) – the European Employees’ Forum (EEF) – was less prominent than during earlier processes of European-wide restructuring (EU0804039I), and the crucial rounds of negotiations were carried out in the different countries.

UK-level negotiations

During the negotiations in the UK, the Unite trade union specifically objected to the number of immediate job cuts proposed for the two British plants compared to the German sites. Unite was also concerned over alleged Magna plans to reduce production capacity in the longer term in the northwestern town of Ellesmere Port, as well as plans to close the Luton plant in northeast England after the end of the current joint-venture production with Renault in 2013.

However, after several weeks of negotiations, an agreement was reached which, according to the trade union, reduced the number of job cuts from 1,100 to 600 jobs, while it also included more explicit long-term commitments. Ellesmere Port was guaranteed as the production site for the next generation of Astra vehicles from 2016 onwards. Magna also promised to maintain Luton as a ‘key site’ in the future and to thus make determined efforts to secure replacement production for the period after 2013. In exchange, Unite agreed to a number of cost-saving and efficiency measures, including a freeze on basic pay rates, backdated to 1 September 2009.

Reaction to GM decision

Unite’s joint General Secretary, Tony Woodley, publicly praised the agreement as a good compromise solution. Similar views were expressed by the Vauxhall Human Resources (HR) Director, Phil Millward, and the Ellesmere Port plant convener, John Featherston, in interviews with the author; the interviews were conduced as part of a broader Eurofound study on industrial relations in the automotive sector during the current economic crisis.

Nevertheless, the trade union reaction in the UK to the subsequent turnaround in GM’s position in early November made it clear that the sale of Opel and Vauxhall to the Magna–Sberbank consortium was always perceived as a ‘second-best’ solution. Mr Woodley described the GM announcement as ‘fantastic news’ and expressed the expectation that British plants would look to a better future than what they could have expected under the ownership of Magna–Sberbank. This has led to an open rift with trade union positions in Germany, where GM’s decision generated a great deal of criticism and several one-day strike actions across GM’s German plants.

Commentary

The drawn-out negotiations over the future of GM’s European operations demonstrates the power of large multinational companies to play off national governments and trade unions against each other, even in situations of extreme trade difficulties. It also reveals the fragile nature of European-level trade union cohesion within GM’s EWC. A further interesting question is the extent to which the late intervention by the European Commission had an impact on GM strategy, given that it provided Detroit with a convenient excuse to reverse its earlier decision with regard to the Magna–Sberbank deal.

Thomas Fetzer, IRRU, University of Warwick

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