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Last Updated: Tuesday, 11 July 2006, 16:53 GMT 17:53 UK
GM to close sole Portuguese plant
A billboard outside the Opel factory in Azambuja
GM employs nearly 65,000 people in Europe
Troubled carmaker GM is to close its only factory in Portugal this year, with the loss of at least 1,200 jobs.

The firm is to move production of Combo vans from the plant at Azambuja, 30 miles north of Lisbon, to a larger facility at Zaragoza in Spain.

The cost of producing vehicles made the site uncompetitive, GM said, meaning there was "no alternative" to closure.

GM said it would reimburse the government for any financial aid it had received which was "undeserved".

Cost pressures

The carmaker has reportedly received up to 30m euros ($38m; 21m) in government support in recent years, although this has never been confirmed.

Workers at the Azambuja plant, GM's smallest assembly unit in Europe, staged a one-day strike last month in protest at its possible closure.

GM has said that each vehicle produced there cost 500 euros more than those manufactured in other locations.

Several carmakers have switched production from established European markets to eastern European countries in search of lower labour costs.

GM has opened a new plant near St Petersburg and is considering a joint venture in Poland.

GM said it took the decision to close the Portuguese plant because of "microeconomic conditions".

As well as its 1,200 production staff, GM employs a further 800 people in Portugal in administrative roles.

It is not clear whether their jobs are under threat.

Government officials have tried hard to save the plant but recent discussions with GM have proved unsuccessful.

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