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Business secretary predicts painful change for GM Europe

Business Secreatry Lord Mandelson has said there will be "painful change" resulting from the takeover of General Motors European arm.

Speaking to the BBC, Lord Mandeslon said whichever one of the three bidders for GM Europe takes it over will cut costs and consolidate.

However he said he was working hard to secure the future of Vauxhall's plants.

Lord Mandelson said: "We have to ensure productive plants, where the greatest percentage of sales take place and which include UK Vauxhall plants, have a secure future."

He also rejected criticism the UK car scrappage scheme, introduced on Monday, was helping overseas manufacturers because so many cars are imported.

Lord Mandelson said many vehicles sold in Europe have British components and they were all helping each other.

Three suitors have submitted bids to buy a stake in GM Europe.

General Motors has not named the three but Fiat and Canadian parts maker Magna have declared an interest, while Sky News says the other is Belgian Investment and Holdings Company RHJ International.

The deadline for GM's European business closed at midnight  last night.

GM Europe has said it needs £3 billion and could face a cash crisis by the end of June.

Vauxhall employs 5,000 people at two plants, Ellesmere Port in Merseyside, which makes cars and Luton where vans are made.

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