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GM looks for local support to maintain UK plant

Local government support is set to play a pivotal role in plans aimed at helping General Motors maintain a passenger car manufacturing presence in the UK.

Officials at the US company are to ask for assistance with overhead costs such as land rates and energy costs as part of the drive to keep its factory at Ellesmere Port, near Liverpool, in the running for production of the next-generation Opel-Vauxhall Astra.

“In the next year or so, we will have discussions on the package for the Delta project and we are looking for support. We want to make the authorities aware of the areas where the plant at Ellesmere is uncompetitive in relation to other countries,” GM Europe vice president Carl-Peter Forster said in an interview at the London International Motor Show.

“We are building new capacity in anticipation of future demand, so that is in Eastern Europe, rather than Western Europe. In the west, our basic idea remains to manufacture where our customers are, and we have already held extended discussions around the future of Ellesmere Port.

“We have always said we would like to stay there if the plant is competitive and that’s what we are working on. We believe it can be done, but it needs some work. We need support from government and some concessions from our people with cost and flexibility issues, but it can be done…we want to stay in Britain,” said Forster, who is also managing director of Opel.

Forster described the Vauxhall brand as a major player in the UK market and went on: “We have a British brand and it is of benefit for us to manufacture in Britain. If you are seen as a local manufacturer, you enjoy what I regard as a loyalty effect and, while there is no research to prove it, I think the benefit is worth up to three per cent of market share.”

Forster said a decision to close the Combo van factory in Portugal and transfer production to the Spanish plant where the Corsa and Meriva small cars are built was “a good situation” for automotive manufacturing in that country.

But he added: “In the long term, Spain has to be aware of the fact that it is no longer a low-cost country. Wages there are now at two thirds of the level of those in western Germany, and that will put pressure on Spanish manufacturing in future. It is not an urgent matter at the moment, but we have to start thinking about driving productivity further ahead.

“For all that, I would not say that car manufacturing in Europe is in jeopardy. It is sustainable, but that doesn’t mean you can lean back and relax in the knowledge that nothing will happen. It is up to us to remain productive and competitive.”

Forster said an issue facing GM Europe were challenges from competitors based in China, South Korea and Japan. “These manufacturers have the advantage of between 15 per cent and 25 per cent of the value of their vehicles as a result of undervalued exchange rates.

“Politicians in Europe tend not to pay much attention to this – perhaps we have not done a sufficiently good job of communicating this to them – but it is putting tremendous pressure on European manufacturers and volume producers particularly.

“We are not asking for concessions. Everybody understands that this is an instrument in the trade war between the Far Eastern nations and Europe. But I don’t think we are responding to it in an appropriate way.”