FRANKFURT -- German tiremaker and car parts group Continental AG will end production of passenger car tires at its Hanover-Stoecken plant by the end of next year and cut 320 jobs there amid weak demand, it said on Tuesday.
The cuts will reduce staffing levels at the plant in its home base of Hanover by around 10 percent. The factory primarily makes truck tires.
"Slower-than-expected growth of passenger car tires ... leaves us no choice in the end but to halt output of car tires in Stoecken as of December 31, 2006 and to adjust at other plants by optimizing our costs via lower numbers of shifts," Chief Executive Manfred Wennemer said in a statement.
Before the news came out a spokesman for Continental's main labor union said it expected the company to cut up to 800 of the 5,000 jobs at its home base in Hanover. This included 400 manufacturing jobs the Hanover-Stoecken site and another 400 administrative posts at headquarters.
Wennemer had told a newspaper on Sunday that Continental would decide in the next few weeks whether to cut around 320 jobs in Hanover. "We have excess capacity in tires. As a business we are therefore forced to cut jobs, in particular where the costs are highest," he was quoted as saying.
The union thinks Continental's job cuts will be the first step towards transferring all tyre production away from Germany and into low-cost manufacturing centers, the spokesman said.
"Conti seems to be saying goodbye to Germany," he said, adding he expected the Hanover plant to close in the next three to four years. The plant that makes around 1.5 million tires a year has the lowest capacity utilization in the group.