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General Motors is proposing to close one of its four German plants after 2016 as part of a turnround plan for its lossmaking Opel subsidiary in Europe.
After months of talks with unions, the carmaker on Wednesday said it would negotiate on a proposal to rule out compulsory redundancies for the next four years, extending an existing agreement with its workforce. But Opel said it did not expect to continue production at its Bochum plant beyond the 2016 end of the life cycle for the Zafira, a compact people-mover made at the factory.
The proposals continue a carrot-and-stick approach by GM to try to extract concessions from its European unit’s labour unions while cutting excess capacity and retaining the threat of plant closures.
Karl-Friedrich Stracke, Opel chief executive, said industry volumes this year would be down 20 per cent on past years. “Opel needs to adjust its business in a way that enables profitability . . . waiting longer to act would be irresponsible,” Mr Stracke said.
Further talks with labour unions in coming weeks will also include a proposal to delay this year’s negotiated wage increase while considering building non-Opel vehicles in European plants. German workers have wanted Opel plants to make cars for GM’s faster-growing Chevrolet brand.
GM lost $747m in Europe last year, where it sells cars under its Opel/Vauxhall and Chevrolet brands. The financial performance of GM, which is 32 per cent US government-owned after a $50bn-plus bailout in 2009, is under scrutiny in a US election year.
Opel, which sold just 1m vehicles in 2011, makes cars at six plants in the UK, Spain, Germany, and Poland. Its management, guided by a supervisory board stocked with GM executives from the US, had floated the possibility of closing the brand’s plants in Bochum and in Ellesmere Port in the UK as part of its effort to cut costs.
Last month the UK plant won a reprieve when GM agreed to make its next-generation Astra there from 2014 after workers agreed to concessions on wages and working and holiday time.
The Bochum plant, which employs more than 3,000 in Germany’s rust belt Ruhr region, had been seen as likely to be closed as early as 2015. Opel employs 20,800 people in Germany and more than 40,000 across Europe.
GM said: “Given the present economic environment and anticipated future demand, the current management plan, subject to consultation, will not allocate further product to the Bochum site after the run-out of the current Zafira.”
Europe’s sovereign debt crisis has slammed consumer confidence and demand for cars, which fell by nearly 10 per cent year-on-year in May.
An agreement precluding compulsory redundancies at Opel currently runs until 2014.