MUNICH -- General Motors Co. subsidiary Opel announced Thursday it would close its car assembly plant in Antwerp, Belgium.
“In order to keep Opel going and have a sustainable future we have to take some of these types of decisions," Opel CEO Nick Reilly said at a news conference.
The automaker aims to stop production at the factory in the next few months and eventually sell the land that the factory occupies.
The closure could be completed by June or July, unless an alternative can be found through negotiations with the unions, Reilly said. He added that GM has tried to find an alternative to closing the plant and was unsuccessful.
"You have to face reality," Reilly said. "We are losing money and have to do something about it."
Opel's European works council condemned the closure as a "breach of contract" that would trigger millions in unnecessary costs and withdrew its offer to back Reilly's restructuring plan with 265 million euros in annual wage concessions.
Due to the global economic crisis, Opel expects the western European car market to be 1.5 million vehicles below the 13.6 million units sold in 2009 and almost 4 million below the market's peak in 2007.
A strong rise in demand is not foreseen in the near future, the company said in a statement, adding that Opel must reduce its production capacity by approximately 20 percent to survive.
More changes to come
The Antwerp closing is the first of several restructuring moves the automaker plans this year.
Reilly said there were no other plans for factory closures at the moment but there will be production cuts at Opel's and UK sister brand Vauxhall's remaining European factories as well as a reduction of up to 8,300 of the company's 50,000 jobs.
Of those job cuts, 4,000 are planned in Germany, Reilly said.
Although Opel's CEO is courting European governments for around 2.7 billion euros ($3.84 billion) in life-saving state aid, Reilly effectively turned down a 500 million euro offer from Belgian taxpayers to keep the plant alive.
Kris Peeters, the premier of the regional government of Flanders, where the plant is located, said he would ask European Commission President Jose Manuel Barroso on Friday for the Opel business plan to ensure no other Opel plants had had an unfair advantage over Antwerp.
"We will explicitly ask to what extent the Commission will allow other countries to provide aid," Peeters told a news conference. He will also speak with Reilly on Friday.
GM, which lost $88 billion between 2005 and 2008, went bankrupt last summer alongside rival Chrysler Group and was bailed out by the U.S. government in return for a pledge to restructure.
The automaker is selling its Hummer brand, closing Saturn and Pontiac, and said this month it would move ahead with winding down Sweden-based Saab, although bidders for the brand have said they had not yet given up.
Fiat plant at risk
Antwerp would not be the first Belgian car plant to shut. The Opel factory's shut down revives memories of Renault's closure of its Vilvoorde factory on the edge of Brussels in 1997.
Opel Antwerp would be the first major European assembly plant to close since Peugeot shut its factory in Ryton, England, and Opel closed its plant in Azambuja, Portugal, both announced in 2006.
And it may not be the last.
Italy's Fiat S.p.A., which stepped in to help rescue Chrysler, intends to close a plant in Sicily next year, which has prompted plans for a nationwide walkout in protest on February 3.
The Antwerp plant currently employs 2,606 people, which represents about 5 percent of the Opel/Vauxhall's European work force.
The factory makes the Astra three-door hatchback, five-door station wagon and Astra TwinTop coupe cabriolet. Since production started in April 1925, more than 13 million cars and trucks have been built at the site.
Reuters contributed to this report