FRANKFURT (Bloomberg) -- General Motors Co.'s Opel unit solidified plans to close its car plant in Bochum, Germany, at the end of 2014 after workers rejected a wage freeze. It is the first shutdown of an auto factory in the country since World War II.
Opel confirms Bochum plant to close in late 2014
The Opel supervisory board approved managers' decision on halting vehicle production at the site, the Ruesselsheim-based division said today in a statement.
GM's European operations, which also include Opel's UK sister brand Vauxhall, have accumulated $18 billion in losses since 1999.
GM has vowed to break even in Europe by 2015, including plans outlined on April 10 to invest 4 billion euros ($5.2 billion) mainly to bring out 23 new models and 13 engines in three years.
The company is attempting a turnaround amid a European market that's shrinking for a sixth consecutive year. Combined Opel and Vauxhall first-quarter sales in the region declined 8 percent to 208,994 vehicles, according industry association ACEA. European industrywide deliveries fell 10 percent.
Workers at Bochum voted in March against forgoing pay raises in exchange for maintaining production until the end of 2016 of the Zafira minivan at the site.
GM tied the agreement to a plan to expand a logistics center at Bochum and replace carmaking there with parts production after 2016 that would have maintained 1,200 of the factory's more than 3,000 jobs.
The employment-preservation plan is "off the table" after the concessions were rejected, Ulrich Weber, an Opel spokesman, said today by phone. The carmaker has no plans to wind down the Bochum logistics center, he said.
Opel employees at its other four German plants agreed in March to wage freezes in return for GM's pledge to refrain from mass firings until the end of 2016. The carmaker hasn't indicated that it plans to shut any other plant besides Bochum.
Union leaders in Bochum, a former coal mining town in the economically depressed Ruhr region of northwest Germany, believe colleagues at Opel's other three German plants were too willing to sacrifice Bochum in order to save their own factories.
Betting GM would not take the unusual and costly step of shifting production and tooling of the Zafira prior to 2017, the Bochum works council led opposition against a compromise deal that would have kept the plant running through the end of the model's life cycle.
"General Motors said they were willing at most to keep 1,200 people on board, but nothing was set in stone. It never made any concrete binding offer to the work force, so our entire staff would have had to hope they kept up their end of the bargain," Bochum works council head Rainer Einenkel, who also sits on the board of Opel, told Reuters.
Wednesday's boardroom decision will likely mean that the historic home plant of Opel in Ruesselsheim will profit from Bochum's demise as company sources say it is set to build the Zafira during the last two years of the model's life cycle.
"If a decision is taken to shift production of the Zafira to another German factory for 2015 and 2016, then I hope the work force would refuse out of solidarity to Bochum," Einenkel said.
Sources at the company said no decision had yet been made on where the Zafira would be built during the two years.