Select Committee on Trade and Industry Appendices to the Minutes of Evidence


Supplementary Memorandum submitted by Vauxhall Motors

  Q1.  At Q300 a note was offered setting out in greater detail than in the GME press release the impact of the decisions announced on 12 December across Europe

  A1.  On 12 December 2000, GME announced plans to reduce its installed capacity for vehicle production by more than 400,000 units between then and 2004. GME would thus expect to see a reduction in employment levels by 5,000.

    Lean manufacturing implementation would be accelerated at all European plants and capacity utilisation would continue to be evaluated.

    Plans would be introduced to see a salaried headcount reduction by 10 per cent across Europe.

    Cost savings would be sought through various purchasing initiatives including, amongst others, Covisint (the new internet trade exchange established between Ford, GM and DC) and the Fiat alliance in view of joint purchasing and engineering projects.

    As a result of these activities, GME expects to realise savings of over $2 billion (this includes a 12.5 per cent reduction in fixed costs over three years).

    Resume of restructuring impacts within GME in last 10 years:

Antwerp, Belgium

    —  reduction of workforce in Antwerp in 1999 by 1,200 people (18 per cent reduction). At the peak of employment levels (1996) this plant employed 7,660 people by 2002 it will employ 5,046.

    —  The capacity of this site is being reduced by from 390,000 to 300,000 the 3 team-2 team shift work pattern changed to 2 team-2 shift pattern.

Bochum and Russelsheim, Germany

    —  reduction of manufacturing workforce in Bochum (Germany) in 2000 by 1,000 people (10 per cent). At its peak this plant employed 13,996 people (1993) and in 2002 it will employ 9,794 people.

    —  Russelheim leanfield implementation by 2004 will have seen the number of manufacturing employees reduce from 13,463 (1993) to 6,456 people. The capacity of this site is being reduced from 470,000 to 270,000.


    —  Closure of Opel's small car assembly facility in Warsaw in 2000.


    —  Closure of Opel's small car assembly facility in Hungary in 1998.


    —  Closure of car assembly facility in Turkey (200 jobs).


    —  Reduction in employees from 8,823 (at its peak in 1995) to 7,550 in 2002. This plant is building the new Corsa.


    —  Reduction of Luton plant to single shift until 2002 then closure of plant, 2000 jobs affected.

Other activities

    —  Establishment of shared services centre in Barcelona (centralisation of finance staff across Europe).

    —  Establishment of regional sales/marketing offices.

    —  10 per cent reduction in salaried headcount across Europe.

  Q2.  Following the exchange at Q 301ff, it would be helpful to have a note as offered on the enhanced arrangements offered at (a) Luton (b) a comparable German plant, preferably Russelsheim and (c) a comparable Belgian plant, preferably Antwerp.

  A2  Thank you for sending us the tables which Ford provided. We concur with the figures that they have provided you for the legal requirements for (a) Germany (b) Belgium and (c) the UK. We will follow on from the format they have chosen to use under Attachment B.

Attachment B: Separation Comparisons

  Luton Terms

  We have provided the Luton plant hourly and salaried staff with 3 options:

Option A

  Transfer to IBC Vehicles

  Opportunities exist for 1,215 jobs at the IBC.

Option B

  Transfer to Ellesmere Port plant

  A limited number of employees may transfer to Ellesmere Port but if there are a significant number interested more jobs may become available as the retirement package will be offered to employees up there.

  A £10,000 relocation package is available.

Option C

  Special Early Retirement or Separation

  For more details please see attached sheets—Employee Option Choice Form.

  Q3.  At Q321 Mr Reilly was asked about a figure for cancelled contracts. The figures came from a note submitted by the Luton Vauxhall Partnership, which referred to 600 orders and 800/1,000 people. This may indedd refer to the contracts for the now cancelled changeover process. Any clarification would be helpful.

  A3.  Vauxhall's purchasing Department are conducting a continuing, detailed analysis of the impact of the restructuring announcement on suppliers. At present the analysis has been completed for the first tier suppliers only, the figures for the second tier will be available in the next two weeks.

First tier suppliers

  The current figures are that if the new Vectra is not manufactured in the UK 1,453 first tier supplier jobs will be affected but if it is manufactured in the UK (ie Ellesmere Port) the figure will fall to 878. Of the 878 job losses approximately 600 would be local to Luton (within a 100 mile radius).

  The figure quoted in the Luton Vauxhall Partnership submission relates to 600 contracts for construction work at the Luton facility which were cancelled as a result of our restructuring announcement. The job loss figures listed above includes these contracts.

  Our Purchasing Department is working closely with suppliers, governmental agencies and GME purchasing to find offsetting opportunities to mitigate the impact on our suppliers.

  Q4.  Clarification of why it is possible to move the Luton Vectra/Epsilon tooling (Q253) and not the Russelsheim tooling (Q328) would be useful.

  A4.  The tooling planned for Russelshiem was not what was required for the new Vectra/Astra flex plant.

  The plant at Russelsheim was not what was required for the new Vectra/Astra flex plant.

  The plant at Russelsheim was to have specific tooling for the notch back version (saloon), the new generation wagon (estate) and for the Omega platform.

  The other new Vectra plant (previously Luton) would have had hatch back tooling with notch back flex. Following the manufacturing restructuring announcement on 12 December 2000 the planning was that another plant (we are hoping it will be Ellesmere Port) will have the hatch back new Vectra tooling with notch back flex as well as being a flex plant with the Astra model. The notch back is the highese volume variant in the UK market.

  Q5.  Confirmation of the figures at Q364 for the possible scale of flex production of the Epsilon would be helpful.


  Q363  —  Regarding forcast numbers for the new Vectra volume at Russelsheim in first couple of years—During the start up year (2002) it is forecast that 173,000 units will be built with 254,000 units being built in 2003.

  Q364  —  The plans are that second new Vectra plant will be tooled up to build 157,800 vehicles a year whilst during the start up year (2002) the forecast is 100,000. The Ellesmere Port plant proposals are that there would be capacity for 45 jobs per hour on two shifts but there would be the potential for a third shift and/or overtime.

  Q6.  As noted by the Chairman at the end of the oral evidence, it would be helpful to know when it was decided to construct the Vivaro van at Luton; against what competition; and when it was decided to produce it in Barcelona as well.

  A6.  The announcement of the agreement between General Motors and Renault to build the new Vivaro van at IBC in Luton was made on 19 December 1996. The competition was other Renault facilities.

  IBC has a volume capacity of 86,000 vans and is unable to build the high roof variant of the van. We understand that Renault forecast the need for the extra volume and are thus considering using another facility to complement the IBC production.

  With respect to Renualt's consideration of Nissan's Barcelona plant we would like to suggest that the Committee contact Renault or Nissan directly as we understand negotiations are continuing.

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