General Motors on Friday said it plans to consolidate production of its Saab and Opel mid-class cars in one plant in a continuing effort to restructure its unprofitable European operations.

The Wall Street Journal (WSJ) said the company played down speculation that the move means it will close one of its two flagship factories - the Opel Vectra is manufactured in Russelsheim, Germany, and the Saab 9-3 in Trollhattan, Sweden.

The report said that, starting in 2008, GM plans to produce the next-generation Opel Vectra and Saab 9-3 at a single plant but quoted an Opel spokeswoman as saying that doesn't mean the other factory will be closed. Opel doesn't see its Russelsheim facility in danger, she said.

According to the WSJ, both factories are severely underutilised. According to a study by auto consultancy B&D Forecast, Trollhattan is operating at 60% of capacity while Russelsheim is producing at 50%.

Factors such as competitiveness and productivity will be analysed to determine which plant gets the extra work, the paper said. The other plant can apply to take over production of other car models, the spokeswoman told the Wall Street Journal, adding that a decision on the matter isn't expected this year.

The WSJ said the plan to combine Saab and Opel production in a single plant comes amid broader restructuring of GM's European operations as the car maker tries to increase co-operation between its two main European brands, which have largely operated independently.

The paper added that GM also is trying to slash its labour costs at Opel, which are about 10% to 15% higher than those paid by other German industrial companies. GM aims to lengthen the working week without extra pay and eliminate privileges such as a break when temperatures exceed 30 degrees C.

GM hopes to wrap up talks with Opel's employees by October 31, the WSJ said, adding that GM's European employees view the move to consolidate Saab and Opel production as an effort by management to play staff of the two plants against each other.

Some Vauxhall-badged five-door versions of the Vectra were also assembled at GM's Ellesmere Port plant near Liverpool until a few months ago. Vauxhall spokesman David Crundwell told just-auto that production was transferred to Russelsheim to free up capacity for the in-demand redesigned Astra, recently launched in the UK. The British plant builds only five-door hatchback models.

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