A redundancy contract just presented to Seat’s trades unions will save the car maker €50m annually by axing 1,346 jobs at its key Martorell car factory in Barcelona, Spanish newspaper Cinco Dias reported on Monday.

While union officials confirmed they have received the plan, they would not detail its prospective savings.

“Clearly the savings will be significant,” said Lolo Galvez, secretary general for Seat at main union CCOO.

“But it’s all going to depend on what we negotiate and I bet my two legs that they [Seat] are going to realise that firing 1,300 people is too many” to support future production needs, Galvez added.

Seat intends to produce 429,000 cars in 2006, up from a sharply reduced 400,000 planned for this year. In 2007, Martorell will make 448,665 cars and will likely maintain that production level until 2009, Cinco Dias said.

The 12,000-worker Martorell factory can make up to 540,000 vehicles a year, unions said.

Seat expects to lose €47.8m in 2005 after earning €144.9m last year, Cinco Dias added.

The Spanish VW unit needs to make the cost-cutting layoffs to survive production cut-backs caused by weak demand for its cars. Seat has acknowledged it is losing competitiveness against VW’s Skoda and Volkswagen units, which produce cars in eastern Europe.

Seat wants to ensure “the survival of the company and its employees after the expected restructuring… It is obvious that the low social costs and long work schedules available in eastern Europe and Asian countries have thrown Spain’s car-making industry into serious trouble,” Cinco Dias quoted Seat as saying.

Seat and union groups will meet on Wednesday (November 9) to discuss the redundancies.

Unions are scheduled to begin a 24-hour strike late that day and will also stage a huge demonstration in Barcelona to protest the measure, which has now involved Spain’s government.

While pledging to help the parties reach a mutually-satisfactory deal, officials from the Catalonia (Barcelona) government have stressed that it’s up to the parties to reach their own deal.

Ivan Castano