UK union welcomes GM's decision to keep Vauxhall

LONDON - Britain's Unite union on Wednesday welcomed the decision by General Motors not to sell its European Vauxhall unit, saying it was a far better deal and that it expected the government to offer financial support.

General Motors on Tuesday abandoned the painstakingly negotiated deal to sell Opel, including its British Vauxhall plants, to a group led by Canadian auto parts supplier Magna.

The decision leaves open the question of how GM will finance its plan to restructure Opel, the backbone of its operations in Europe and a key source of global technology for mid-sized cars.

GM expects the Opel restructuring, which may be job cuts, could cost 3 billion euros ($4.4 billion).

We expect that all the governments of Europe, including our own, will now be asked to contribute to maintaining the business, Tony Woodley, Unite's joint general secretary, said in a statement. This is a massively significant development and a far better deal for Britain.

Vauxhall employs about 5,500 people.

Of course, restructuring will still be needed, but this is a business which supports well over 20,000 jobs and 400 component companies (in Britain), Woodley also said. Our expectation then, is that General Motors will be sticking to its original plan for its EU sites, including the UK.

A spokeswoman for Unite said she had no further details on whether any jobs would be cut and that GM's original plan for Europe included beginning production of some new model cars at Vauxhall's plant in Luton.

The British government said on Tuesday it would be willing to provide funding to secure the future of Opel car plants in Britain. The next day, Business Secretary Peter Mandelson said that he was keen on early talks with GM.

Unlike in Britain, GM's decision not to sell Opel raised the ire of German politicians and labor leaders. Germany viewed Magna and its Russian partner Sberbank as most likely to preserve as many German jobs and plants as possible.

(Reporting by Catherine Bosley; Editing by Elaine Hardcastle)