Struggling Seat has agreed with unions to eliminate 1,600 jobs.

According to dpa-AFX, SEAT reached an agreement with unions in Barcelona on Wednesday (4 April).

In a statement e-mailed to Bloomberg, Erich Schmitt, Seat’s chief executive, said that the agreement, “makes it possible to lay the foundations for the future of Seat” and “helps us to avoid more drastic measures.”

Seat announced last month that it was negotiating with unions to cut jobs.

Hurt by slumping sales and cut-throat competition, Seat laid off 645 workers from its key Martorell factory in 2005. It has since re-hired approximately 520.

Seat posted a loss of EUR49.1m ($US64.3m) last year and aims to return to profit in 2008.

The company said in March it plans to invest EUR450m annually in coming years to develop new models, including a sedan and a small sport-utility vehicle.

According to Bloomberg, Seat will offer early retirement, severance packages and long-term leaves of absence to achieve workforce reductions.