German auto parts supplier Benteler will build a new factory in Palencia, central Spain and boost headcount at its Burgos facilities to meet a slew of new supply contracts, trades unions said on Thursday.

Separately, workers at French parts maker Valeo cancelled a 24-hour strike to protest against the company's plans to close its Ourense plant and dismiss 258 employees.

Apart from the Burgos expansion, Benteler will hire 100 workers for the new Palencia plant, scheduled to come on stream in mid 2005. The plant will supply a range of components for Renault's Spanish factories, expected to pick up steam amid its plans to boost the Modus model's output in Valladolid.

Benteler is raising production "very substantially" to meet "many new orders and projects next year," workers committee chief Jose Caro, told just-auto. He was speaking on the sidelines of a meeting between Benteler's management and Spanish government and union representatives. The Palencia project is understood to cost about €11 million.

Benteler will add 80 workers to the 650 at its Burgos plant, which makes components for Mercedes, Mazda, Renault, VW and Ford cars, Caro said. The plant expects to deliver parts worth €140 million in 2004.

But while Benteler is adding staff, Valeo is reducing numbers to restructure its troubled Spanish operation.

Workers called off the Ourense strike after the Galicia government pledged to intervene to avoid the redundancies. The company intends to transfer part of its Martos (southern Spain) factory's production to a new site in Poland and dismiss 300 of 500 auxiliary workers in the process, local newswire Europa Press reported.  The plant's 1,600 fixed employees reportedly will reportedly keep their jobs.

Valeo could not be reached for comment.