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Vauxhall's announced that the next generation of its Astra model will be built at its Ellesmere Port, site, creating 700 direct jobs and 3,000 positions in firms which supply the plant with parts and services.
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, whose future had been under threat, 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% vote in favour of a new pay and conditions package by the 2,100 workers at the site.
Assembly of the new car is scheduled to start in 2015, with a minimum of 160,000 vehicles to be produced each year, 20,000 more than last year.
Vauxhall will also raise the local supply content for the Astra to at least 25% which will create further employment locally and in the UK.
The new deal will see a four-year pay agreement, including a two-year wage freeze from 2013, 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.
The Prime Minister, motor industry leaders and union officials all welcomed the development, which followed news that the number of cars built in the UK last month was almost 10% up on a year ago, boosted by strong export demand.
Mr Aldred said: ``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.''
Prime Minister David Cameron said: ``This has been a real team effort with the Government, the company, unions and workers all focused on keeping production in the UK.
``And the workforce at Ellesmere Port should take great pride in their skill, hard work and commitment which has proved vital to ensuring this great result today.''
Business Secretary Vince Cable said he was ``proud'' to be at the factory for the announcement, describing it as a ``very great day''.
Mr Cable travelled to the United States to lobby Vauxhall owners General Motors on behalf of Ellesmere Port, saying that its case ``made itself''.
He added: ``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.
``This is a success for team working. We have had business, unions and Government working together in a very productive partnership.''
Unite general secretary Len McCluskey said: ``From a position of uncertainty earlier this year, there is now a potential for a future at the plant until 2020 and beyond.
``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.''
The decision to build the new Astra in the UK will hit GM's factory in Bochum, Germany.
There were 94,352 cars produced in the UK in April, an increase of 9.3% on the same month in 2011, and up by 11.8% to almost half a million for the first four months of the year.
The Society of Motor Manufacturers and Traders (SMMT) said its figures showed that the UK remained one of the most competitive countries for car firms.