US auto parts marker Delphi has struck a EUR500m pre-agreement with Spanish unions to close its Puerto Real, Cadiz, factory and dismiss 1,600 workers.

Under the agreement, which both parties expect to formalise in mid-July, Delphi agreed to pay EUR120m to compensate workers who lose their jobs when it shuts the site on 31 July.

Moreover, Delphi agreed to cede the factory’s landfield and machinery, worth around EUR170m and pay another EUR210m in debts, according to Manuel Jimenez, secretary general of Spanish union UGT for the Andalusia region. He was present during a gruelling 30-hour meeting between the parties yesterday.

Contradicting press reports that said Delphi would exit Spain’s components industry, Jimenez said the company is only closing Puerto Real’s plant, which it operates under its bankrupt Delphi Automotive  Systems Espana (Dase) subsidiary.

Delphi has six other factories in Spain which it will continue to operate, he said.

A Delphi official confirmed the pre-agreement to close Puerto Real but would not comment about its contents.

“We will wait until all the parties have a chance to ratify it before we comment,” he told just-auto on Friday afternoon.

The accord comes four months after the conflict began in Spain, unleashing a national drama in which workers staged several strikes and impassioned protests. It represents a win for the unions, who fought hard to press the company and the government to compensate the workers and find a future for the site.

The 1,600 workers will receive redundancy payments equivalent to 45 days per worked year to a maximum of EUR200,000.

Regarding the site’s future, Jimenez said union and government officials are negotiating with a buyer from the alternative energy industry.

“It will not be a components firm. The components industry is in crisis in Europe and we don’t want it to come back here,” Jimenez noted.

He said Delphi’s staff would be retrained to take up jobs with whomever relocates to the new site. The factory’s estimated 1,500 temporary workers will also be given new jobs under that scheme.

Delphi did not cede the factory’s client book – which includes auto heavyweights such as Mercedes, GM and Ford – nor its manufacturing patents.  The factory makes bearings, steering systems and halfshafts.

Ivan Castano