The immediate future of Vauxhall’s Luton plant has been secured after its French owner announced plans to build a new model of the Vivaro van and increase production in 2019.
PSA, the manufacturer of Peugeot and Citroen that acquired Vauxhall last year, is expected to invest around £100m in the plant despite persistent uncertainty over Brexit.
The UK government has given PSA £9m to facilitate the expansion, which will be regarded as an important vote of confidence in Britain. The car industry has repeatedly warned that investment decisions are on hold as the future of cross-border manufacturing and trade with the EU is decided.
Although PSA would not put a figure on jobs, the Unite union said it believed 350-450 additional jobs could be created at Luton, and that the plant’s survival was effectively guaranteed for at least 10-12 years.
PSA’s chief executive, Carlos Tavares, also signalled that some Peugeot and Citroen vans would be made at Luton, as the factory’s capacity was to increase from 60,000 to 100,000 vehicles per year.
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Workers in Luton, where cars have been made since 1905, have faced an uncertain future since the PSA takeover from General Motors in 2017. Despite pledges to avoid redundancies, PSA has announced 650 job cuts at Vauxhall’s other plant in Ellesmere Port, where the Astra car is made.
Tavares said a decision on Ellesmere Port would not be made before 2020, when there would be more clarity on Brexit and the result of PSA’s plans to increase productivity at the plant.
Announcing the decision to expand at Luton, Tavares said: “Our growing business requires more high-quality, desirable vans to meet our customers’ demands, which we can produce here at Luton.”
Manufacturing costs had decreased by 17%, he said. “But we have more work to do, as we have to reduce costs by 20% to meet European competitors.”
He said government assurances that it would seek tariff-free and frictionless trade had helped “secure the workforce” at Luton, but added: “We have made this decision in spite of Brexit. The automotive industry lacks certainty and Brexit remains a concern for our business.”
The business secretary, Greg Clark, who joined Tavares in Luton for the announcement, said: “I know there were concerns when GM sold the plant to PSA. So I’m absolutely delighted that this big investment in the future is being made today.”
Clark said 75% of Vauxhall’s products were exported, making it one of the most successful industrial facilities in the UK. He added: “This is about not only safeguarding the 1,400 jobs here, but expanding jobs available in the future and making sure that for many years to come Luton remains synonymous with commercial vehicles.”
The business secretary said the government was “absolutely clear of the central requirement to maintain access to markets that have been important – that means trade that is tariff-free and frictionless”.
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Tavares said the outcome of Brexit talks would partly determine Ellesmere Port’s fate, and he acknowledged that the Luton decision remained a risk ahead of an exit deal. But he said: “The world is total chaos. If you wait for everyone to decide it is the right time to invest, the only thing you can be sure about is it is too late, so you have to take some risk.”
He added: “The management team of this plant control their destiny … There is nothing more dangerous for a plant than a complacent management team.”
Len McCluskey, the general secretary of Unite, said the Luton expansion was good news, but warned it was “a complicated package, with pros and cons”. Workers are likely to have accept new terms and conditions in return for guarantees on jobs, and union members will still have to vote to accept a deal.
“Clearly the idea that this plant now has a vehicle with a 10- to 12-year shelf life and could create 350-450 new jobs is a huge plus,” McCluskey said. “But we want to make sure we have similar assurances for Ellesmere Port.”
He said he rejected Tavares’s claims that UK plants were less productive, adding: “We have a world-class workforce. Brexit and the confusion and the uncertainty doesn’t help. All of industry tells me they are deeply concerned. But Carlos Tavares has said repeatedly that he doesn’t want to close any car plants.”