German tyre maker and car parts group Continental will end production of passenger car tyres at its Hanover-Stoecken plant by the end of next year and cut 320 jobs there amid weak demand.

Reuters said cuts at the plant, which primarily makes truck tyres, will reduce staffing levels by around 10%.

"Slower-than-expected growth of passenger car tyres ... leaves us no choice in the end but to halt output of car tyres in Stoecken as of December 31, 2006 and to adjust at other plants by optimising our costs via lower numbers of shifts," chief executive Manfred Wennemer reportedly said in a statement.

Before the news came out a spokesman for Continental's main labour union told Reuters it expected the company to cut up to 800 of the 5,000 jobs at its home base of Hanover. This included 400 manufacturing jobs at the Hanover-Stoecken site and another 400 administrative posts at headquarters.

Wennemer reportedly 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 tyres. 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 centres, the spokesman told Reuters.

"Conti seems to be saying goodbye to Germany," he reportedly said, adding he expected the Hanover plant to close in the next three to four years.

The plant that makes around 1.5 million tyres a year has the lowest capacity utilisation in the group, Reuters noted.

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