Spain’s SEAT Announces New Round of Production Cuts

MADRID – Spanish auto maker SEAT announces production cutbacks that will affect nearly all of the Volkswagen Group affiliate’s more than 9,000 employees.

The plan includes cutting production of the Audi Q3 cross/utility vehicle and the SEAT Leon and Altea ranges from September through December. The auto maker’s Exeo range was discontinued last week.

Low demand is cited as the reason for the furloughs and production rollbacks, even though global SEAT deliveries increased 10.2% in the first five months of 2013 compared with prior-year, according to WardsAuto data. Sales plummeted 25.4% last year from like-2011, which saw a 17.8% backslide.

Under the 4-month idling schedule, SEAT will furlough 571 workers daily at its Martorell assembly plant and Zona Franca stamping facility for up to 16 days each. The layoffs result from the termination of Exeo production on the 2,800-worker No.3 line at Martorell, where the Q3 also is built.

SEAT says it has no plans to increase production of the Q3, which accounts for more than one-third of the auto maker’s current output, at other plants that build the CUV.

The 3,800 workers on Martorell’s No.2 line, where Leon and Altea models are built, will be idle for 35 days during 2014. The number of idled employees could rise if the auto maker does not increase Leon production to a level that would justify adding a third shift.

Early this year SEAT eliminated one shift of the assembly line that builds Ibiza models, and did not renew the contracts of 400 temporary workers. The Ibiza range is popular, accounting for 62% of SEAT-brand production in 2012, but is in its fourth generation that launched in 2007.

The idling plan is the sixth to be implemented by SEAT since the global financial crisis of 2008-2009, and the first since 2010-2011. The auto maker has been able to adjust production during the past two years under flexibility measures negotiated with its works council. Still, only 377,000 SEAT and Q3 models were assembled last year at the 600,000-unit-capacity Martorell plant.

SEAT Chairman Juergen Stackmann is trying to persuade VW to assign a new product to Martorell to compensate for the discontinuation of the Exeo. It could be a new urban CUV that the parent company wants to launch in Europe, but VW’s Czech affiliate Skoda also is a candidate.

Without a new model, a portion of the 2,800 workers on the Q3 and Exeo line could be idled yet again, with most of their salaries covered by taxpayers. But if SEAT does not find a definitive solution, permanent layoffs could result.