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Fears grow for 2,800 General Motors jobs at Ellesmere Port

• General Motors ‘losing patience’ with European operations
• Business secretary, Vince Cable in talks with GM executives

The business secretary, Vince Cable, met executives from General Motors last week to discuss the automotive group’s UK operations amid speculation that 2,800 jobs are under threat at one of Britain’s largest car factories.

GM’s European arm has become the subject of high-level political discussions as the world’s largest car manufacturer prepares to announce heavy losses at its continental unit when it reports fourth-quarter results on Thursday. GM has signalled to the government that it is losing patience with its stubbornly loss-making European operations, whose performance is in stark contrast to the rest of the group, with the Ellesmere Port plant in Merseyside and a factory in Bochum, Germany, reportedly being considered for closure.

GM employs 2,800 people at Ellesmere Port, which makes the Astra Sports Tourer, the Astra 5-door hatchback and the Astravan and has earned plaudits internally as one of the group’s most efficient units. GM’s Luton plant, where 1,500 employees make the Vivaro van, is understood to be safe.

A spokesperson for the Department for Business Innovation and Skills declined to comment on “speculation” about Ellesmere Port or on Cable’s meeting, which followed another meeting between GM and senior government figures last month, but indicated that Ellesmere Port’s strong performance has been emphasised to GM executives.

“Ministers are in regular contact with GM in the US and Europe at all levels,” the spokesperson said. “The UK has some of the best and most productive vehicle plants in Europe. Vauxhall is a key part of that success, and manufacturing at both Ellesmere Port and Luton is a top priority for the government. We are committed to doing all we can to ensure that both plants continue to be integral to GM’s European operations.”

GM Europe is already cutting 8,000 jobs in a restructuring programme that includes the closure of a plant in Antwerp.

Andrew Miller, the Labour MP for Ellesmere Port and Neston, urged the government to help guarantee the plant’s future. He said: “Given the strong partnership between the company and its workforce, which has resulted in the factory becoming one of the most productive in Europe, I am convinced that with the right support from the government and all other agencies, the factory has a long-term future.”

In November GM announced that it had stayed in profit for its seventh successive quarter as it reported net income of .7bn for the third quarter of 2011, driven by strong US sales. However, the results showed that GM’s European operations were mired in the red, as losses halved to 2m. Dropping its target of breaking even in Europe this year, GM declined to predict when it will start to make money in the region.

Ellesmere Port lost one of its internal champions recently with the retirement of Nick Reilly, GM’s European president, a former manager at the plant. Speaking last year, he said: “It’s one of our best plants anywhere in terms of productivity, in terms of quality and in terms of continuous improvement.” In his leaving speech last week, Reilly paid tribute to the plant’s ongoing success. He has been replaced by Karl-Friedrich Stracke, the head of GM’s German-based Opel subsidiary.

Industry observers believe European automotive manufacturers still have to address the consequences of a post-crunch sales slump that has left the market with a capacity glut. Mark Fulthorpe, an analyst at IHS Automotive, said that premium car makers such as BMW and Mercedes-Benz are operating at full stretch, but mass-market manufacturers such as GM, Fiat, Peugeot Citroen and Renault-Nissan are probably running at less than 80% of their production capacity. Fulthorpe said a slew of investments in central and eastern Europe from the late 1990s to the middle of the previous decade had left the European industry with excess capacity as the market suffered a prolonged post-crunch slump.

“The overall demand for output from these factories is far more limited than it was when these investments were made,” said Fulthorpe, pointing to a passenger car market for western Europe that saw 14.8m vehicles sold in 2007. Those figures have slumped since, with sales of just over 12m expected this year. GM declined to comment. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds