GM faces huge costs if Bochum plant shut - works leader

Bochum, Germany Sat Mar 31, 2012 9:44pm IST

A clock shows five to twelve next to an Opel logo at the Opel plant of Bochum in March 28, 2012. REUTERS/Ina Fassbender

A clock shows five to twelve next to an Opel logo at the Opel plant of Bochum in March 28, 2012.

Credit: Reuters/Ina Fassbender

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Bochum, Germany (Reuters) - Labour leaders at loss-making European car maker Opel have warned parent company General Motors (GM.N) that closing one of its oldest factories in Germany would be massively costly and damage the company's image.

"This would cost GM billions," Rainer Einenkel, head of the Bochum plant's works council said at a news conference on Saturday following a staff town hall meeting in the western German city of Bochum.

GM, which has been pushing Opel to lower costs by shifting production from high-wage countries in western Europe to emerging markets, may have to shoulder huge costs for severance pay and legal proceedings, said Einenkel.

Closing Bochum, a plant in the Ruhr industrial heartland that has been producing cars for 50 years could also severely damage Opel's brand, said Einenkel who also sits on the car maker's supervisory board.

The 20-member board met last Wednesday to discuss ways to move Opel into profit, but adjourned deliberations without agreement on painful restructuring steps.

Opel's Bochum factory emerged as symbol of Germany's post-war economic recovery after it started production of Opel Kadett coupe, a rival to the Volkswagen VOWGp.DE Beetle, in an area devastated by the closure of coal mines. Its 3,100 workers make the Zafira and Astra models with capacity to produce 160,000 vehicles a year, according to the company's website.

Although General Motors has pledged not to close plants before the end of 2014, Einenkel said GM's demands centred on closing between two and three factories.

"No factory is safe," he said.

Analysts say the car plants in Bochum and Ellesmere Port in northwest Britain are most at risk.

Opel's works council chief said GM would struggle to find an investor for Bochum, because the site also required a heavy investment to clean up the site, built on a former coal-mine.

(Reporting By Andreas Cremer)

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