EUROPE'S most productive car plant is facing the first industrial action in its 18-year history, union leaders warned last night.

Officials warned that the Nissan factory in Sunderland was "dangerously close" to a stoppage, following the continued failure to resolve lingering talks on pay and conditions.

But the company last night expressed "surprise and disappointment" at the warning by AEEU Amicus and described the union statement as "alarmist and inaccurate".

The clash follows the failure to reach a settlement three weeks after new pay rates and conditions for the years 2003/4 were scheduled to be implemented.

It is the first time since the plant opened in 1985 that talks have failed to be resolved on time between Nissan and the works council.

Even the intervention of conciliation service Acas, last Friday, failed to break the deadlock, with the works council believed to be sticking to its desire for a six per cent increase over two years.

An Amicus statement last night claimed the works council would today present the company's two-year offer, worth about three per cent, to the 4,672 workforce without a recommendation.

The union's regional secretary, Davey Hall, said: "If the workforce rejects the final offer we will be obliged to ballot our members for industrial action."

Amicus, which represents 797 Nissan workers, or 17 per cent of the workforce, has not been involved in the talks, although seven of the elected members of the works council are understood to be union members.

Nissan managing director John Cushnaghan said last night: "Nissan is surprised and disappointed in the reaction of Amicus to the current round of pay negotiations.

"The recent Press release is both alarmist and inaccurate and in no way reflects the reality of the situation at the plant."

Mr Cushnaghan said an Amicus full-time official had been fully briefed throughout the negotiations, with only two issues yet to be resolved, one of which is pay.

He said, contrary to the union statement, negotiations were still on-going and there was no reason why the "exemplary relations" of the last 17 years should not be continued.

The deadlock comes in the week the company launched its new Micra model on the UK market.

Automotive industry expert Professor Garel Rhys said despite the threats, strike action was unlikely, due to the potential effect on Nissan sales.

"They know they would be striking their workers out of a job and not into a pay increase," he said.