Vauxhall announces job losses at Ellesmere Port plant

In May 2006, Vauxhall Motors announced that approximately 900 jobs are to be cut at its Ellesmere Port plant in Merseyside, northwest England, with the removal of the third shift of production. Coming only a month after the announcement of the closure of Peugeot’s plant at Ryton near Coventry, the move has prompted further trade union criticism of the UK’s relaxed labour laws.

On 17 May 2006, following several months of speculation, Vauxhall announced that the night shift at its Ellesmere Port car factory is to be axed. As a result, around 900 jobs will go from the end of this summer. Chair of Vauxhall, Jon Browning, stated that the company aims to achieve the job cuts through voluntary redundancies. Vauxhall, which is owned by General Motors (GM), is offering severance payments of up to GBP 30,000 (€43,367) and immediate final salary pensions for workers aged over 50 years who have 10 years’ pensionable service. For workers aged under 50 years with up to six years’ service, the company is offering payments of GBP 10,000 (€14,455) with a deferred pension.

Restructuring at GM

In March, President of GM Europe, Carl-Peter Forster, raised his fears about the future of the Ellesmere Port plant at the Geneva Motor Show, when he stated that plants in western Europe could close in the future and that Ellesmere Port, which employs 2,900 workers, could not yet match the productivity and quality of the ‘benchmark’ factory at Eisenach in Germany. The long-term future of Ellesmere Port now hangs in the balance as GM reviews its European manufacturing requirements in preparation for the introduction of the next-generation Astra model. In the past year, some 12,000 jobs have been eliminated by GM in Europe, as part of a major restructuring plan to reduce overcapacity and return to profitability.

Government aid

Government Ministers Gordon Brown, Chancellor of the Exchequer, and Alistair Darling, Trade and Industry Secretary, visited the Ellesmere Port plant on the day of the announcement. In a meeting with Mr Browning, they offered assurances that the government would look favourably at GM’s multimillion-pound application for grant aid to support the new Astra model. The chancellor commented: ‘We want to do everything we can as a government to put this company and the workforce in a position to win a new model and secure the GBP 100 million plus investment to guarantee work for 20 years ahead in this area.’ Mr Brown said that about GBP 2 million (€2.89 million) would be provided immediately to help workers retrain, and he promised GBP 300 million (approximately €433 million) to encourage innovation and enterprise in northwest England.

Union reaction

Coming only a month after the announcement of the Peugeot plant’s closure at Ryton (UK0605029I), the job cuts at Vauxhall were strongly condemned by trade unions. Both Amicus and the Transport and General Workers’ Union (TGWU) blamed the ‘weakness’ of UK employment law for the announcement that saw the UK plant, the most productive of all GM’s European plants, suffer job losses before its continental European counterparts. According to Tony Woodley, TGWU General Secretary: ‘There is no doubt this cut to a productive and successful plant, GM’s most improved plant in Europe, is being made because GM can sack our people on the cheap’. Amicus maintains that the minimum redundancy pay in some other EU countries is almost five times the UK equivalent.

Future production plans

At the moment, five European plants are being considered for the manufacture of the next-generation Astra. Mr Forster commented that there was ‘no viable alternative’ to the job cuts at Ellesmere Port. The decision had to be taken to bring production capacity into line with expected demand. However, he warned that it was not ‘an indicator of future product allocation decisions’ by the company.

GM has actively fostered a strategy of internal competition between its European plants, thereby playing one plant off against the other. Mr Forster has denied claims that this represents a ‘brutal and inhuman’ attempt to push up working hours and drive down wages. He insisted that it was vital to ensure productivity gains so that the difference in production costs between high-cost western European locations and cheaper eastern European factories was only a few hundred euros per car. GM claims that it costs almost €200 more to manufacture a car in the UK than at its German or Belgian factories.

Commentary

Ellesmere Port is the last remaining Vauxhall manufacturing site in the UK, following the closure of its Luton plant in 2001 (UK0012104F). Isolated from GM’s other European production sites, and reliant upon a single model, its position is similar to that of Peugeot’s plant at Ryton.

Joy Batchelor, International Automotive Research Centre, Warwick Manufacturing Group

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