MADRID -- Volkswagen's Spanish unit Seat aims to cut 1,346 jobs in Spain, nearly 9 percent of the workforce, after talks with unions to lower pay and working hours broke down, the company said on Friday.
The unions responded by calling a strike for Thursday, Nov. 10.
The carmaker is struggling to cut costs in the face of falling sales and market share in Europe, and had previously proposed a 10 percent cut in pay and working hours as an alternative to job losses.
The company now has to win clearance for the job cuts by justifying them with the regional government's Labor Ministry, a process that usually takes a month, Seat said.
Seat has around 16,000 employees in Spain, most of them at its main plant at Martorell in Barcelona, which produces models including the Altea, Leon and Toledo.
Seat's European sales dropped by 5.3 percent in the first nine months of the year to 271,000 units, while its market share fell to 2.4 percent from 2.6 percent a year earlier.
"The problem is the European car markets are frozen, and over 90 percent of sales are in Europe," said a company spokesman in Frankfurt. "Germany, Seat's second-biggest market after Spain, has seen a decline in car sales for the past five years."
Matias Carneiro, spokesman for the main union at Martorell, said there were still options available before cutting jobs but that the company was signalling it did not want to negotiate.
"We've called a strike to show our rejection of this plan," he said.
Each day of lost production at Seat is worth 6 million euros ($7.2 million) of lost pretax profit at Volkswagen, investment bank Morgan Stanley estimated in a recent note.
It is not the only carmaker in Spain threatening job cuts and looking for savings in response to weak European sales.
General Motors is due to decide in the next few weeks whether production of its next new model stays in Spain or goes to Poland, where labor costs are less than a third of Spain's.
Most of the major carmakers have plants in Spain, attracted by its proximity to big European markets such as France and Germany and by what were once competitive labor costs.
The country churns out about 3 million cars a year, 80 percent of which are for export, making it the third-biggest European producer after Germany and France. But production has dropped 12 percent in the first nine months of this year as sales fell.