'Vauxhall factory may not be secure' Expert's warning on fall in sales.

Byline: BY ALISTAIR HOUGHTON Daily Post Business Sta

LEADING motor industry expert Professor Garel Rhys yesterday warned that the future of Vauxhall's Ellesmere Port plant may not be secure, as owner General Motors may consider closing European factories to cope with the credit crunch.

Prof Rhys, director of the Centre for Automotive Industry Research at Cardiff Business School, said he expected the current slump in the car market would last for up to five years - and said the European automotive industry could by then employ 20% fewer people.

GM has been badly hit by the credit crunch, particularly in its American homeland, and is pleading for a cash bailout from the US Government.

Prof Rhys, one of the motor industry's most respected analysts, said he expected GM might consider closing a European plant to save money.

He said that if GM were to consider closures then the Cheshire plant would be second on their list - but said it was likely the plant would survive.

Union leaders remain confident in the plant's future and say they hope it could see more growth after 2009 when it starts building the new Astra.

Prof Rhys said Vauxhall was performing comparatively well, with four of its vehicles still among the UK's top 10 bestsellers and with sales declining at a slower rate than some competitors.

But with a general fall in car sales as consumers tighten their belts, he still expected GM's Western European sales to fall by as much as 150,000 - an amount he described as "the production of one assembly plant".

He said that manufacturers would be reluctant to close plants as that meant they would have less capacity when demand returned, but said nothing could be ruled out.

Prof Rhys said: "There's a good probability Ellesmere Port will survive this. But at the moment all options are open as far as motor manufacturers are concerned.

"In Western Europe I'd suggest it's (GM's) Antwerp plant, then Ellesmere Port at the edge of the table.

"If manufacturers make plant closures then if the market recovers, they simply won't have the capacity to maintain the level of market share they had in 2007.

Nevertheless they can improve productivity.

"I think the balance of probabilities is that in three or four years' time GM will probably have one less plant in Europe."

Prof Rhys said the UK government needed to make clear to GM that it would support moves to protect the Ellesmere Port plant, while unions would need to agree flexible ways of working.

Union leaders from Ellesmere Port travelled to Germany this week to meet GM bosses and discuss how to cut costs.

Prof Rhys said he expected more car firms to announce redundancies and nonproduction days to cope with falling demand. "Probably when we start to emerge from this in about four years' time there will be a fifth fewer people working in the car industry, component plants and other suppliers such as the steel industry."

Both Vauxhall and Jaguar Land Rover in Halewood, which employs another 2,000 people, have announced several non-production days.

JLR also announced last week it was to axe another 400 jobs across the UK.

[e-mail]