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Motoring news

Honda production resumes, but Vauxhall future uncertain

01/06/2009

Production has resumed at one of the UK's largest car plants following a four-month period of inactivity.

But the Honda factory in Swindon will only be working at around 50% of full capacity, its directors say.

The re-opening follows the introduction of a 3% pay cut for workers and 5% for management, in a bid to prevent compulsory redundancies.

"I think most [workers] will be happy to put down the DIY and start building cars," Andy Conlon, a thirteen-year-veteran of the Swindon plant, told BBC News.

The news comes days after the Government hailed an "impressive" start to its own scrappage scheme, claiming that 35,000 buyers have ordered vehicles through the initiative since its announcement in April.

However, the UK car industry faces more testing times, with Vauxhall owner General Motors widely expected to file for bankruptcy today.

Workers returning to the company's Ellesmere Port plant after a week-long break were told that they may have to wait two months to find out if their jobs are safe.

Martin Leech, former president of Ford in Europe and chief executive of Maserati, told BBC Radio Four's Today Programme that falling demand was a worldwide problem that only the most competitive companies would survive. He described Vauxhall as "vulnerable".

"We're looking at a situation where there's around 95 million units of production capacity worldwide to produce cars and trucks, and demand for only about 55 million," Leech said.

"And when you have that huge disparity between the numbers of vehicles that can be produced and the numbers of vehicles that are required, then you obviously are going to get a lot of pressure on all automotive companies worldwide.

"Ultimately it's the survival of the fittest."