Vauxhall’s next generation Astra model will be built at its Ellesmere Port, Merseyside factory, creating thousands of jobs.
The £125 million investment in the car plant will guarantee its future into the next decade. Around 700 jobs will be created at the site, with another 3000 positions in firms which supply the plant with parts and services.
Business Secretary Vince Cable said he was "proud" to be at the factory for the announcement, describing it as a "very great day". Cable travelled to the United States to lobby Vauxhall owners General Motors on behalf of Ellesmere Port, saying today that its case "made itself".
"They wanted an assurance that the Government was behind the industry, which we are. The car industry in the UK is a great success story,” Cable said.
Vauxhall chairman Duncan Aldred, who first worked at the Ellesmere Port factory 20 years ago as a graduate, said it was a "historic day" for Vauxhall. The factory will move from two to three shift working to build the new Astra, while "unprecedented" levels of flexibility will be introduced.
Confirmation of the investment followed a 94 per cent vote in favour of a new pay and conditions package by the 2,100 workers at the site.
"This is great news for the Ellesmere Port plant, our employees, the local community, our suppliers, the Vauxhall brand and the UK. We have been able to develop a responsible labour agreement that secures the plant's future.
"This is assisted by the Government's industrial strategy, increasing its focus on the manufacturing sector and creating ideal ground for companies to build up long-term investments.
"With Ellesmere Port's proven build quality and a new agreement that ensures excellent cost competitiveness, this facility will provide additional employment and, as the lead plant for the next-generation Astra, will be one of the cornerstones of our European manufacturing footprint," Aldred said.
The new workforce agreement comes into force in 2013 and runs through the life of the next generation Astra, into the early 2020s. As part of the agreement, the plant will implement a number of "creative operating solutions" to improve flexibility and reduce fixed costs which will significantly improve its competitiveness.
Ellesmere Port will become one of the most competitive plants in the Vauxhall/Opel manufacturing network.
Assembly of the new car is scheduled to start in 2015, with a minimum of 160,000 vehicles to be produced each year.
Vauxhall will also raise the local supply content for the Astra to be built in Ellesmere Port to at least 25 per cent which will create further employment locally and in the UK overall and further increase the plant's competitiveness.
The new deal includes a four year pay agreement, production on 51 weeks a year and scrapping of the traditional summer and other closures which have been a part of UK industry for decades.
Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders, said: "It is great news that Vauxhall will retain its Ellesmere Port plant and another important vote of confidence for the UK automotive industry, adding to the wave of recent investment decisions that have backed our facilities and workforce.
"The decision will see the next generation Vauxhall Astra produced at the plant, supporting the local supply chain and safeguarding jobs well into the future.
"Manufacturing is now core to our country's economy, and the partnership forged between companies, employees, trades unions and government in the UK automotive industry demonstrates that the country is a globally competitive place to do business."
Unite general secretary Len McCluskey welcomed the union vote, adding: "This is extremely good news for Ellesmere Port. The company has made an offer to the workforce, which our members have accepted.
"From a position of uncertainty earlier this year, there is now a potential for a future at the plant until 2020 and beyond, and with that 700 new skilled jobs at Ellesmere Port itself, and possibly hundreds more in the supply chain.
"Importantly, this move will also bring component supplier plants back into the UK, a development that strengthens our manufacturing base generally.
"However, we are very aware that this offer has implications for colleagues across General Motors.
"We will continue now to talk about the implications as a consequence of our members' decision with our partners in Europe and the company's management."
It is understood that the decision may leave General Motors plant in Bochum, Germany in danger of closure. "It's almost certain that one of GM's German plants will now be closed, probably the plant in Bochum," a source close to the negotiations said.
GM is expected to halt production of the Astra at its main plant in Russelsheim, Germany, making the car only at Ellesmere Port and at Poland's Gliwice plant from 2015.