Workers at bankrupt French supplier New Fabris have won severance pay averaging EUR28,500 (US$40,500) after threatening to blow up their factory along with components destined for Renault and PSA Peugeot Citroen.

As well as average statutory severance of EUR17,500 (US$24,900), the 366 workers have also each been offered EUR11,000 (US$15,600) in jobseeker aid, financed through the two carmakers' purchase of equipment and undelivered components.

Industry minister Christian Estrosi said: "Resorting to violence is not the solution to a programme of job cuts," adding that the lifting of the bomb threat was an absolute precondition to the agreement.

Workers had threatened to ignite gas canisters at the plant if they didn't get severance pay, illustrating escalating French labour tensions that have led to a series of so-called 'bossnappings' where striking workers have taken executives hostage until demands were met.

However, a threat still hangs over the factory. Guy Eyermann, the New Fabris works council secretary and an official of the Confederation Generale du Travail union, said workers are still not happy with the increased offer because factory floor employees were entitled to far less statutory severance.

New Fabris, called that because the company survived an earlier brush with insolvency, was placed in liquidation last month.