After empty promises to JLR, UK pledges £270 million loan guarantees for GM Europe
13 Mar 2010
In stark contrast to providing any guarantees for the £340-million loan approved by the European Investment Bank (EIB) for Tata Motors' UK subsidiary Jaguar Land Rover (JLR) for making low-emission cars, the UK government yesterday agreed to provide loan guarantees worth £270 million (€300 million) in support of the restructuring programme of US auto giant GM's European operations. (See: Tata Motors secures £340-million EIB loan for JLR, despite UK government's empty promises)
Business secretary, Lord Mandelson said that the deal would secure the future of GM's two Vauxhall plants in Ellesmere Port and Luton in the UK.
''The company has been in discussion with the British government for many months and this very positive conclusion is an important step towards implementing Opel/Vauxhall's pan-European viability plan,'' GM said in a statement.
The UK will provide the loan guarantee though the government's £2.3-billion Automotive Assistance Programme announced by the UK government in January 2009 for the UK car industry (See: Britain unveils £2.3-billion loan for car industry).
In a separate development in Spain, an agreement has also been reached between GM and the local workers unions regarding the reduction of the company's workforce by 900 employees from the present strength of 6,300. The union also accepted a wage freeze for two years, with 2-per cent increases in the following two years.
Nick Reilly, Opel / Vauxhall CEO, said, ''Today marks an important step for the future of Opel/Vauxhall. This shows significant progress in our efforts to secure loan guarantees from European governments and to get support from our employee representatives.''
