Rising labor costs and slack demand has prompted General Motors (NYSE:GM) to lay off workers at its Sao Jose dos Campos production facility in Brazil.
The 598 workers who are being cut were already on paid leave as the the auto giant slows production at one assembly line. GM has been trying to shutter the line, but has encountered resistance from local unions and political leaders, Reuters noted.
Falling demand for new vehicles in Brazil has caused automakers to pull back on car production. Last year, productivity at GM’s plant fell to its lowest level in nine years. Brazilian politicians have urged the company not to lay off workers.
Though Brazil’s economy has been lackluster for two years, the nation’s unemployment remains low, leading to rising wages for workers.
In January, GM negotiated a deal with the union to spend $249 million to keep the assembly line running. After the job cuts, the line will employ about 1,200.
Shares of GM slipped fractionally in Wednesday morning trading.