Vauxhall factory workers fear job losses

The sale of GM's European arm is essential if it is to restructure successfully and become profitable again, and despite talks with potential bidders hitting complications last week, a deal has now been agreed.

Canadian car parts manufacturer Magna will take control of Opel/Vauxhall, after taking a 55 percent stake along with a Russian business partner. Although the deal has been approved, it will take up to eight weeks for due diligence to be completed - so there still could be a twist.

Magna will own 20 percent of Opel/Vauxhall in exchange for a 500-700 million euro investment (around £400-600m), with state-owned Russian lender OAO Sperbank taking 35 percent. GM will retain a 35 percent stake, and the remaining ten percent will be held by employees.

Despite GM keeping a larger equity share than Magna, the maker has agreed to transfer its shares into a trust that essentially protects its European arm from bankruptcy in the US - though the US Treasury has objected to this move.

And unions in the UK are worried about how the move will affect British jobs, because the German Government is supplying 1.5bn euros to keep Opel in business until the Magna deal is completed - half of which is coming directly from the German states where Opel has factories, in exchange for a promise that none of them will close. Some believe the move means that UK factories will suffer the brunt of massive job losses, as Magna restructures the maker to get it back to profitability.

And the fears are justified, because Magna says it will eventually shed 11,000 jobs in Europe, only 2,600 of which will be in Germany. That said, Magna has assured the UK Government that all 5,000 employees across Vauxhall's two UK plants will be protected in the short term, at least. The Canadian firm's CEO, Siegfried Wolf, hopes to have Opel/Vauxhall making a profit again 'within two years'.

Magna plans to contract out some of Opel/Vauxhall's excess manufacturing capacity for other cars, though it will also send some Opel manufacturing to Canada. It will also look to extend the maker's presence in the Russian market.

Meanwhile, Saab, GM's other European maker, may end up in the hands of Swedish supercar firm Koenigsegg. Saab has been given until 20th August to reorganise under Swedish bankruptcy rules, but claims a buyer will be found within two weeks. The two other bidders are Renco Group from the US and, of course, Fiat.

Mark Nichol