Business News : Future of German Opel plant uncertain after 2014

BOCHUM/BERLIN, Germany (Business News) - The head of German carmaker Opel, under pressure from parent General Motors (GM.N) to end losses, refused to promise workers at its plant in Bochum on Monday that their jobs would be safeguarded after 2014.

The plant, located in the rust-belt Ruhr region devastated by coal mine closures, is expected to shut after the company chose to build the next generation of its popular Astra compact in Britain and Poland where wages are cheaper.

Unions say around 45,000 jobs are linked to the factory but a weak economy has hit car sales in Europe, forcing manufacturers to confront high fixed costs and a capacity overhang that GM says equates to 10 plants.

Germany has had few major plant closures in the last four years and shutting Bochum could become an issue in next year's federal election.

Workers had been hoping Opel chief executive officer, Karl-Friedrich Stracke, would shed light on the company's plans, but he said a mid-term business plan for GM's European operations would not be submitted to the supervisory board until June 28.

"There is no decision for Bochum beyond 2014," Stracke said in a 20-minute speech at a closed-door meeting with staff, as workers booed him.

Many workers at the four-hour meeting wore yellow shirts emblazoned with Opel's lighting-bolt logo. Some waved banners saying: "Death in stages."

"Stracke does nothing but beat around the bush. We're fed up to the back teeth," one worker said as he stormed out of the building.

About 100 journalists followed the event from the parking lot outside the plant. Sheets of black cloth were used to prevent them from looking inside the meeting hall.

Speculation that Bochum would close intensified after GM said last week that it would halt Astra production at Opel's main plant in Ruesselsheim, Germany, making the car only in Britain's Ellesmere Port and Gliwice in Poland.

STRIKES WOULD BE "SUICIDE"

GM lost $ 747 million on its European operations last year, and rumors regularly surface that it may resume efforts to sell Opel. A plan to sell the company three years ago caused a public outcry in Germany.

"Demand for Opel vehicles across Europe plunged 16 percent in the first three months of the year," said Ferdinand Dudenhoeffer, director of the Centre for Automotive Research at the University of Duisburg-Essen.

He expects the Bochum plant, which can produce around 160,000 cars a year, to be shut down after 2014.

German media reported on Sunday that Opel was preparing to shift production of the Zafira compact van from Bochum to Ruesselsheim to compensate for the loss of the Astra, but Stracke denied any decision had been made.

Ellesmere Port won the Astra contract after workers agreed to a four-year pay deal including a two-year pay freeze.

Bochum's works council head Rainer Einenkel said workers had already committed to cut labor costs in 2010 and would not accept any more concessions. But he ruled out industrial action for now, saying that would be "suicide".

The German economy has resisted the recession seen in some European countries though unemployment in Bochum stands at 10.2 percent, far higher than the national average of 7.0.

However, Germany's largest industrial union, IG Metall, has just agreed a 4.3 percent pay rise, its biggest in 20 years, in a sign that Germany is willing to tolerate higher wages even if that pushes up inflation.

Bochum directly employs around 3,100 people, and unions have said many more workers at suppliers and other businesses depend on the plant.

Opel supplier Ernst Droeren GmbH & Co KG, which packages tires for the GM division, said business would suffer if GM closed the factory.

"Opel has always been and still is somewhat of an icon in this working-class environment," said Ernst Ulrich Droeren, managing partner of the Bochum-based supplier. "Closure of the plant would be devastating for the regional economy."

Closing Bochum could have political ramifications in Germany where the future of Opel was a major theme in the run-up to the 2009 national elections.

The Social Democrats won a resounding victory on May 13 in North-Rhine Westphalia, the country's most populous state where Bochum is located, and may seek to turn the plant's future into a campaign issue for the 2013 federal vote.