Valladolid's Renault factory is a 'firm candidate' to manufacture the company's new engine and two new models, one of them electric - contracts that would attract a total investment of some 500 million euros.

This investment could also be extended to the Palencia factory, if that were to build the new Renault Megane Sport, according to an announcement made today by Jean-Pierre Laurent, the president of Renault España at the Barcelona Motor Show.

Laurent met this morning with the president of the Spanish government, José Luis Rodríguez Zapatero, and the Minister for Commerce, Industry and Tourism, Miguel Sebastián.

The decision about which plant would build the new generation engine, the electric car and the conventional model in 2012 and 2013 will not be taken until the last quarter of the year, but Laurent made it clear that the decision would be influenced by the level of government help the manufacturer would receive.

Laurent told waiting journalists that he had asked Zapatero to relax employment laws to make Spain more competitive.  He maintained that Renault wanted to retain its workforce in Spain, but that it would have to be flexible in order to adapt to the fluctuation in demand in the market.

He added that Spain was currently competitive with plants in France, but not to the tune of 1000€ per car, as is the case with Renault's plants in Eastern European countries, which are also bidding for the same contracts.

Laurent also warned Zapatero of the urgent need to take measures to stop the collapse of the car industry, which is proving catastrophic for manufacturers, suppliers and dealerships alike, with 20% of all those employed in the industry at genuine risk of losing their jobs.