Negotiations between management and staff at the Krupp Camford Pressings plant near Llanelli will continue over the next four weeks.

Workers had been threatened with redundancy unless they agreed to accept a pay cut of up to 20%.

Officials from the Transport and General Workers Union have spent two days of talks with management.

They have accepted that the factory is now in serious economic difficulty after the loss of important contracts, notably Rover.

BBC Wales's Laura Jones reports on the dispute

The negotiations will continue to discuss how the new financial constraints can be dealt with, but job losses are thought unlikely at the moment.

Union officials were called in after 600 workers were given an ultimatum: "take a pay cut or lose your jobs."

The meeting was seen as crucial for the future of workers at the plant which supplies components to the car industry.

TGWU representative Geoff Jacob said: "We have made progress - there is a clear understanding that any agreement has to be arrived at through negotiation.

"We have, however, set a deadline of 1 October."

Job losses

Llanelli Assembly Member Helen Mary Jones has backed the workers and has also met with managers of the plant.

The area has seen a large number of job losses this year.

Krupps Camford is part of one of Germany's biggest industrial conglomerates and is understood to be threatening the plant with closure.

Its competitiveness has been hit by the strength of the pound.