The Travails Of Vauxhall
Saving General Motors’ cash-strapped European division from the consequences of its parent’s bankruptcy was always likely to be both complicated and highly political. Last week the two remaining bidders for Opel and Vauxhall were invited to a summit at the German Chancellery.
Many though Fiat would come out on top, but the Italians were beaten by the unlikely alliance of a Canadian car-parts maker, Magna, and the Russian savings bank Sberbank. The irony of a Russian state bank rescuing a pair of car firms whose US parent is being nationalised will be a jolt to anyone who still thought the car industry was ruled by market principles.
The question facing Vauxhall’s 5,000-strong workforce is: who the hell are Magna? The company, built from a single garage by a colourful Austrian-born entrepreneur named Frank Stronach, is the largest car-parts supplier in North America, yet it has no experience of running a motor company and there is scant detail on what, exactly, it plans to do to the European arm of GM.
The involvement of the Russian oligarch Oleg Deripaska – the man caught up in the Mandelson/Osborne yacht imbroglio last summer – may provide a clue. Deripaska (an “industrial partner” in the deal) owns the Russian carmaker GAZ and, until he fell on straitened times, had a 20% share in Magna. The plan he hatched with Stronach in 2007 was to conquer the Russian car market and make headway into Europe and Asia. Thanks to the deep pockets of Sberbank and the convenient collapse of GM, the plan is back in play.
That may not come as much reassurance to workers at Ellesmere Port and Luton, and matters haven’t been helped by the verbal sparring between the Business Secretary, Lord Mandelson, and union leaders who accuse him of not doing enough to secure a commitment for the plants. Mandelson will probably stave off significant job losses for now. But since he has not committed a penny to Vauxhall’s new owners (unlike the Germans, who advanced a 1.5bn euro, bridging loan to secure Opel) his influence is limited.
One might have hoped for better. Imagine the creations of an industrial culture in which somebody fought for British ownership of some of our landmark marques. This is not a protectionist, but a pluralist position: neither a wholly British-owned nor wholly foreign owned industrial sector is desirable. You want a mix. If Magna redirects Luton’s van production to Russia and Ellesmere’s car production to Spain and Germany, we will see that ownership matters.