THE GOVERNMENT is to sue troubled American car manufacture, General Motors (GM) over its breach of contract, after negotiations to save its Opel car plant broke down last week.
According to the government, the contract between the car manufacturer and the state runs until 2008.
GM took the final decision to close down the Ajambuja plant in October, following a meeting between the company’s European representatives, union leaders and company representatives in Portugal.
GM is concentrating its Iberian operations in Spain, while relocating many of its factories in St. Petersburg, Russia, where productivity levels are higher and wages lower.
The company claimed it cost 500 euros more to produce an Opel car in Portugal than it would in Russia.
Eric Stevens, European GM Vice President said last week that: “GM has fulfilled all its obligations with regards to the Portuguese state, but will be open to continued negotiations with José Sócrates.” Stevens added that, “negotiations over compensation would only begin as of this week”.