Less than four years after launching its paint shop in Hoče near Maribor, the automotive multinational Magna will move the car body painting business fully to its location in Austria's Graz next week.

Magna informed the 158 employees at Hoče about the plans on 1 March, citing the market situation and a decline in demand as the reason. It is not clear yet how many workers will lose their jobs.

The company had received a €18.6 million incentive for the greenfield investment in Hoče, which it has now agreed to fully repay along with interest, Economy Minister Matjaž Han said.

Under the October 2017 agreement with the government, Magna committed to creating 400 jobs in the first stage of the project and another 1,000 later on.

Magna now plans to keep 50 workers in Hoče, where it says it will set up a development centre to support other Magna facilities around the globe.

According to Han, the other 108 workers are to be offered a job at the Graz location of Magna Steyr, the Austrian subsidiary of the Canadian group.

The trade union and the workers were shocked at the development. KSS trade union leader Gvido Novak said some changes had been expected, but the news of them becoming jobless next week came as a shock.

Workers will be furloughed until all layoff procedures are completed and will be receiving 90% of their pay, the unionist said.

Magna said that it planned to employ as many workers as possible within the group, but some would be laid off though the exact number was not yet known.

One of the strongest supporters of Magna's investment, Hoče Mayor Marko Soršak regretted that the company failed to obtain on time an environmental permit for production of electric cars for US company Fisker, which are now made in Graz. He hopes Magna will find a new partner to fully realise its Hoče plans.

Challenges in supply chains and other market disruptions have made planning production for Magna rather difficult and the Hoče location has suspended production several times over the past two years.

Magna said it was committed to staying in Slovenia and was optimistic the market situation would soon stabilise. It said it was not considering dropping its strategic plan to assemble cars in Slovenia.

When an opportunity for a major deal arises, it plans to go ahead with stage 2 of the project in Hoče - building a bodywork plant and a car assembly plant.

The company has already bought part of the land and obtained the environmental permit for stage 2, and the municipality has adapted its spatial plan to Magna's needs.

Following initial opposition to Magna's plans by environmentalists, Magna obtained all the permits and signed an incentive contract with the government, starting trial production in March 2019.

When it became clear Magna will not be able to meet its commitments, the Economy Ministry extended the deadline by two years last March, until the end of October 2024.