Portugal’s government is committed to creating the necessary conditions for General Motors to keep its light commercial plant open in Portugal, economy minister Manuel Pinho told Reuters on Wednesday.

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Pinho reportedly said the challenge would be to boost competitiveness at the factory, where GM said on Tuesday it was seeking to cut costs. GM has not ruled out closing the factory, which employs 1,100 workers.


“The government is committed to create the conditions to increase competitiveness at the factory, in such a way that it can attract new (vehicle) models,” Pinho told Reuters.


Reuters noted that GM has said costs at the Azambuja plant are EUR500 ($US643) more per vehicle than at other possible locations.


It added that Portugal’s government in January helped secure a commitment from Volkswagen to build an additional model at its Portuguese plant in Setubal, guaranteeing jobs there.

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That VW plant builds the ageing VW Sharan and Seat Alhambra minivans now due to go out of production in 2008 – former partner Ford has now gone its own way to replace the Galaxy it once shared with the German and Spanish automakers.


The government deal with VW has secured production of the replacement Sharan/Alhambra twins from 2008-2015.


VW’s new Eos coupe-cabriolet is also built at Setubal.


Reuters said the Setubal plant represents about 1% of Portugal’s gross domestic product and is an important source of exports for the country.


“The government challenges all parties … we have to be positive to reach a good result”, for the GM plant, Pinho reportedly said.


The minister told Reuters he had been involved in talks with GM and workers for several months over the plant. A decision on the outcome is expected by the middle of June.


The plant made about 74,000 Combo panel vans in 2005, the report added.