Lord Mandelson’s guarded comments about a potential ‘fix’ – that resulted in the Magna-GM deal that will see the Canadian parts manufacturer take a majority share of Opel and Vauxhall – will raise fears that the UK government believes a deal has been struck that will be at the cost of Vauxhall’s two plants.
The German government is known to have lobbied hard for the Magna deal, despite reticence from GM and British unions. The reason is simple – the Magna deal guaranteed no plant closures in Germany.
The German government provided €1.5bn in financial support to Opel while the deal went through, and has promised a further €4.5bn upon completion of the deal. The implication inherent in Mandelson’s words is clear.
“I think this is going to trigger quite a debate and quite an examination by the European Commission.
“European governments and the commission will want to drill down into the business plans and the financial contributions by the various governments to see that European state aid rules in this Magna-GM deal are being respected.”
“The commission should not accept anything that looks like a political fix or any linkage between aid and retention of jobs in any specific plant or country.
“Our Vauxhall plants at Ellesmere Port and Luton are highly efficient and I am sure, and insist, that this be recognised.
“So there will be some tough, detailed negotiations that lie ahead and it is important that the European Commission takes a role and a hand in these negotiations.”
Mandelson is also likely to be puzzled by the see-sawing in GM’s stance over a potential buyer, given that it was initially dead-set against selling to Magna for fear of its technology falling into rival hands.
On the very morning that the Magna deal was announced, industry gossip had it that GM had decided against a sale, unhappy with the Magna deal.
That heralded a harder line from the German government over state bridging loans and, miraculously, a complete reversal on GM’s part. The deal with Magna was back on in a matter of hours.
The German government was known to be keen to tie up Opel negotiations in time for the forthcoming general election.
The prospect now is for the deal to go in front of the European regulators to investigate the possibility of anything untoward.
But the fact that Mandelson has publicly voiced his concern will raise alarm that a deal has been done that will be to the detriment of Vauxhall’s workers in Ellesmere Port and Luton.
Mandelson has received some stick from commentators about his involvement in lobbying for the UK’s interests, but the Business Secretary has been playing a long game, lobbying for the Opel/Vauxhall version of the Chevy Volt, the Ampera, to be built at Ellesmere Port.
So, it’s not clear who’s come out on top this time. In ‘buying’ the Magna deal, the German government has taken on a considerable financial burden, and the devil will be in the detail of the deal. Mandelson’s low profile may yet pay off.
