General Motors Co. (NYSE: GM) announced Thursday it will build its next-generation Vauxhall/Open Astra cars at two factories, one in Ellesmere Port, UK, and Gliwice, Poland, leaving the company's Bochum, Germany, plant facing closure.
Detroit-based GM has been struggling for years in Europe, where the market is glutted with excess vehicles, and the company took a $300 million loss on the continent in the first quarter. Rumors have been swirling for months that GM will close one of its Opel/Vauxhall brand factories, either in the UK or in Germany, to cut capacity and labor costs.
The Ellesmere Port labor union and GM hammered out a new, four-year labor agreement on Wednesday, which enabled the decision to place production of the new Astra there, according to the company. The Ellesmere Port factory and the Gliwice plant will produce the new Astra car beginning in 2015. Production of the new model is expected to create 700 direct jobs in Ellesmere Port.
GM will invest €300 million ($380 million) to retool the plants for the latest Astra model.
GM also affirmed that it will continue to use its plant in Rüsselsheim, Germany, where Opel is currently based and which is currently its most modern plant, although it will discontinue Astra production.
A competitive Rüsselsheim plant plays an important role in our growth strategy. It has an outstanding and highly capable workforce, and it delivers excellent quality, Opel/Vauxhall CEO Karl-Friedrich Stracke said.
No mention was made of the embattled Bochum plant, however, leading industry watchers to predict that it will get the ax in the near future. There has been conjecture for some time that GM would close one of its Opel factories, and the company has been in labor negotiations at its European operations for some time.
A company spokesman confirmed that the Bochum plant would continue to produce the Zafira minivan and an older model Astra for the Eastern European market through 2014, but no decisions about the fate of the factory beyond that have been made, according to Bloomberg Businessweek.
General Motors Company (NYSE: GM) shares were down 7 cents to $21.84 Thursday morning.