British government announces $410 mln loan guarantee to General Motors for Vauxhall unit

UK gives GM loan guarantee for Vauxhall

LONDON — Britain will give a 270 million pound ($410 million) loan guarantee to General Motors Co. to help keep its Vauxhall operations going in the country, a government official said Friday.

That is well short of the euro2 billion ($2.8 billion) GM is seeking from European governments to help restructure Vauxhall and its other European unit, German-based Opel.

British Business Secretary Peter Mandelson said that talks were ongoing with GM Europe and other European governments to finalize the funding terms and the implementation of a business plan.

Mandelson said the two Vauxhall factories in Britain are “excellent plants employing a first rate work force.”

“We need Vauxhall to thrive as part of Britain’s automotive manufacturing base and following our negotiations with GM Europe I am confident it will do so,” he added.

Union leaders representing workers at the plants in Luton, north of London, and Ellesmere Port in northern England, welcomed the announcement.

“This great news for British industry,” said Tony Woodley, joint leader of the Unite union. “The loan will help save thousands of jobs in Vauxhall’s operations and in the 400 companies in its supply chain.”

General Motors abruptly abandoned a plan to sell the majority of Opel and Vauxhall to investors late last year, instead choosing to keep the European brands for itself.

It last week said it would triple its own funding for Opel and Vauxhall to euro1.9 billion and reduced the amount it was seeking from European governments after it became apparent they were unlikely to deliver the initially requested euro2.7 billion.

German Economy Minister Rainer Bruederle said last week that a lot of questions remained regarding GM’s plans with Opel.

The British loan comes as Prime Minister Gordon Brown prepares for what is expected to be a closely fought national election, with the opposition Conservative Party currently just ahead in the polls. The election must be held by early June.

“Nothing could illustrate more clearly the difference between Labour’s proactive approach to helping manufacturing and the shortsighted do-nothing attitude of the Tories,” Woodley said.