Volkswagen will invest around EUR785 million ($1 billion) in a plant near Pamplona, Spain over the next five years. VW’s plant has a workforce of around 4,600 people, helping produce the Polo subcompact. The plant has the capacity to produce up to 300,000 cars a year, making it one of the group's biggest producers.
A big chunk of the EUR785-million investment will be spent to prepare installations for building the next generation of Polo as well as its future replacement, Volkswagen said in a statement. VW is the third carmaker in recent months to boost investment in Spain. In November 2012, Renault announced it would be hiring 1,300 new workers for its plants in Spain.
Ford also announced it would shut down its site in Belgium shift production to Spain. Nissan, on the other hand, recently announced that it was cancelling plans to expand production of a new model in Spain, following a failure to secure a deal with its union workers over new contract terms.
Nissan said the cancellation of its expansion plans means Spain would miss a chance to see 4,000 new jobs and a EUR130-million investment. The Spanish government has commended the fresh investments by VW, Nissan and Ford, saying they are the result of a labor market reform that makes Spain more competitive for businesses as well as cheaper for companies to hire and fire employees.