Opel CEO faces workers over possible plant closure

FRANKFURT, Germany Mon May 21, 2012 4:31am EDT

An undated handout picture shows the newly appointed CEO of Adam Opel AG, Karl-Friedrich Stracke. REUTERS/Opel//Handout

An undated handout picture shows the newly appointed CEO of Adam Opel AG, Karl-Friedrich Stracke.

Credit: Reuters/Opel//Handout

FRANKFURT, Germany (Reuters) - The head of General Motors (GM.N) unit Opel sought to allay workers' fears that the automaker plans to shut one of its four German plants as it pulls production of the Astra, its best-selling model, from the country.

Opel Chief Executive Karl-Friedrich Stracke is under pressure from GM to end heavy losses at the U.S. carmaker's German arm by shifting production to countries with lower labor costs.

Stracke told workers in Bochum on Monday that no decision has been made on their plant's future beyond 2014. State premier Hannelore Kraft who led the Social Democrats to victory in an election this month, had earlier called on him to make a clear statement on his plans.

A decision to close the Bochum plant would be one of the most dramatic so far as Europe's carmakers look to restructure in response to more than four years of declines in demand and profits. It employs around 3,100 people and has a production capacity of around 160,000 cars a year.

GM, which sells under the Vauxhall brand in Britain, plans to halt production of the Astra at Opel's main plant in Ruesselsheim, Germany, making the car only in Britain and Poland.

There is concern that Opel will fill the gap in Ruesselsheim by shifting production there from Bochum, effectively leaving the plant in the German state of North Rhine-Westphalia with slim chances of survival.

"Demand for Opel vehicles across Europe plunged 16 percent in the first three months of the year. That's why GM will reduce capacities," said Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen. "I expect the Bochum factory to be shut down after 2014."

Labor leaders have criticized Opel's move to pull Astra production from Germany, saying it breaches promises management made to workers two years ago.

They have also said they fear that production of the Zafira compact van will be moved from Bochum to Ruesselsheim.

GM lost $747 million on its European operations last year, and rumors regularly surface that the U.S. carmaker may eventually throw in the towel and resume efforts to sell Opel.

A previous move for a sale three years ago caused a public outcry in Germany as thousands of jobs were seen to be at risk.

(Reporting by Matthias Inverardi and Andreas Cremer; Writing by Maria Sheahan; Editing by Erica Billingham)

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