Renault will invest EUR531m by 2010 to support its factories in Spain which will continue to churn out the Modus supermini and Megane models for global export, a trade union official told just-auto. But the French car giant has begun negotiating a new collective wage deal for the period with which unions are dissatisfied, and consequently could take weeks to be signed.

The latest capital expenditure is smaller than the EUR564m Renault invested in the 2004-2006 period as the company works to cut costs to stay competitive in the cut-throat global automotive industry.

"We have to do more with less money and we are willing to do this by maximising our productivity in each [factory] line," said Joaquin Arias Gallego, Renault secretary general at trade union Comisiones Obreras (CCOO).

The funds will finance the next launch phase of the Modus (and the R-77 longer Modus) - whose sagging sales have caused big headaches for Renault -as well as the ongoing production of the Megane hatchback and new Clio.

Renault Spain will also start making a new engine for the Renault-Nissan alliance and a new gearbox for global distribution.

Renault has said the workload guarantees the future of the Valladolid, Palencia and Seville factories beyond 2010.

But workers are not buying that.

They want Renault to spell out a clearer future for its Spanish business and to replace the Modus with another model before they sign the new wage deal.

"We want a better project and a new car or we are not going to sign anything," Arias said, adding that Valladolid's output has fallen sharply because of the poor-selling Modus.

Arias said unions want a pay raise of 1% over the inflation rate and new benefits.

Management and workers have already met 11 times to discuss the matter, he added.

Ivan Castano