SALON

Thursday, Jul 12, 2012 9:45 PM UTC

France’s PSA Peugeot-Citroen slashing 8,000 jobs

By

Topics: From the Wires,

France's PSA Peugeot-Citroen slashing 8,000 jobsWorkers of French carmaker PSA Peugeot Citroen demonstrate in front of the factory in Aulnay-sous-Bois, north of Paris, Thursday, July 12, 2012. Struggling French carmaker PSA Peugeot-Citroen is slashing 8,000 jobs in France and closing an iconic site north of Paris. (AP Photo/Thibault Camus)(Credit: AP)

PARIS (AP) — Struggling French carmaker PSA Peugeot-Citroen, facing diving sales in crisis-hit southern Europe, announced a drastic cost-cutting plan Thursday to slash 8,000 jobs in France and close a major factory north of Paris, shocking workers and startling the government.

Employees at the plant in Aulnay-sous-Bois staged a protest strike in front of the site, one of France’s biggest car factories and a bastion of auto making and autoworkers’ unions. They said they would resume striking September 11.

A union representative at the plant, Jean-Pierre Mercier, told BFM-TV that protesters will be looking to enlarge their circle to include employees elsewhere whose jobs are threatened and join a “common combat.”

Company management announced the job cuts and closure plan during a meeting Thursday with its worker representatives.

The company, which warns it faces a first-half loss of €700 million ($858.2 million) this year, is trying to save €1 billion as it struggles to compete in Europe’s stagnant car market. It is suffering particularly amid a slump in sales in the recession-hit south of Europe, and saw sales plunge 20 percent in Europe in the first quarter.

The restructuring plan also includes cuts of 1,400 jobs at the company’s Rennes factory and 3,600 jobs in other French sites. The company employs about 100,000 people in France and 209,000 people worldwide. The announcement came after the company announced plans last year to cut 6,000 jobs.

Chairman Philippe Varin, grim-faced, told reporters that the company is losing about €100 million per month. “No one will be left along the side of the road,” he pledged.

The scope of the jobs to be cut startled the government. Peugeot’s roots run deep in the French culture. It produced its first car in 1891. Peugeot-Citroen now accounts for two-thirds of French car production, Varin said.

A statement from the office of Prime Minister Jean-Marc Ayrault said the plan was “without precedent … a veritable shock for all employees of the group, for the regions affected and, more broadly, for the entire automobile industry.”

France’s car industry was heavy hit by the economic crisis and was given a bailout under then-President Nicolas Sarkozy. Ayrault said a help plan for the industry would be worked out with all those concerned with Peugeot’s restructuring plan and presented to the Cabinet by July 25.

“We can’t keep factories working at half its capacity,” Varin said in an interview Thursday night with the TV station TF1. “We have to stop the hemorrhage.”

About 250 striking workers gathered in front of the Aulnay-sous-Bois plant after the announcement.

Worker Abdallah Baih said, “I woke up this morning, started having breakfast turned on the TV and saw on the screen …’The Aulnay site is going to close.’ Anger. We really feel anger and it’s unfair.”

Peugeot’s problems highlight the current woes facing Europe’s carmakers. Unable to draw on government incentive schemes such as the “cash-for-clunkers” promotions launched in 2008-2009, manufacturers are suffering from falling sales.

European operations for Italian automaker Fiat lost €207 million in the first quarter this year with the number of new car registrations in the region plunged 26 percent to 81,469 units — far outpacing the market’s drop of 6.6 percent in the quarter, according to the European Automobile Manufacturer’s Association.

While Europe’s largest carmaker, Volkswagen, notched up a 13.7 per cent increase in June passenger vehicle sales, it was the US and Asia-Pacific region that lifted the total. Announcing the June figures, the German carmaker warned of “considerable uncertainty” in Europe ahead in the second half.

In the first quarter, Peugeot Citroen’s core automotive division saw revenue from new vehicle sales shrink nearly 17 percent to €6.98 billion. The company’s worldwide sales totaled 790,100 vehicles in the first quarter. Peugeot Citroen’s car parts, financing and logistics divisions managed to partly offset weakness in the car making business.

Peugeot-Citroen shares were up 0.45 percent to €7.17 in early afternoon trading.

Peugeot is hoping a new alliance with General Motors Corp. will allow it to return to long-term profitability. GM has been working hard to return its lossmaking European operations to profitability. It’s European Opel and Vauxhall units have been a drag on the company’s earnings for a dozen years, including a $256 million loss in the first quarter and $700 million last year.

Under the alliance with GM, the American company became the French automaker’s second-largest shareholder with a 7-percent stake, behind the Peugeot family, whose stake dropped from 31 percent to around 25 percent.

Peugeot says the deal will allow it to address tightening emissions targets in Europe and strengthen its position in emerging markets in a way not economically feasible on its own.

Daniel Vernet , who has worked at the Aulnay factory since 1977, maintained that the real motive driving the closure is the company’s far-flung goals. “Peugeot coffers are not empty, but they need cash flow to complete construction of their factory in China and India. What happens here is to sacrifice French employees.”

___

Nicolas Garriga at Aulnay-sous-Bois and Masha Macpherson in Paris contributed to this report.

More Jean-marie Godard.

Next Article

Related Stories

More Related Stories

Featured Slide Shows

The week in 10 pics

close X
  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11
  • Lisa Montgomery embraces her nephew Thursday after a tornado tore apart her home in Cleburne, Texas. The twister killed six people and destroyed entire swaths of the North Texas town.
    Credit: AP/LM Otero

  • Jack McMahon, the defense attorney for abortion doctor Kermit Gosnell, speaks outside the Criminal Justice Center Philadelphia Tuesday. His client was convicted of killing three babies in his clinic, and will serve multiple life sentences.
    Credit: AP/Matt Rourke

  • A photo taken Monday captures Vice President Joe Biden's response to a Milwaukee second-grader's innovative proposal to end America's epidemic of gun violence. This guy!
    Credit: AP/Jenny Aicher

  • Sen. Rand Paul, R-Ky., flanked by a grouper-eyed Michele Bachmann, addresses the IRS' admission that it targeted Tea Party groups in advance of the 2012 election. In an op-ed for CNN Thursday, the Kentucky senator slammed the president for his faux outrage.
    Credit: AP/Molly Riley

  • Ousted IRS chief Steven Miller is sworn in on Capitol Hill Friday. Miller testified before the House Ways and Means Committee on the extra scrutiny the agency gave conservative groups applying for tax-exempt status.
    Credit: AP/J. Scott Applewhite

  • Attorney General Eric Holder pauses as he testifies on Capitol Hill before the House Judiciary Committee Wednesday. Holder is under fire, among other things, for the Justice Department's gathering of phone records at the Associated Press.
    Credit: AP/Carolyn Kaster

  • O.J. Simpson sits during an evidentiary hearing at Clark County District Court in Las Vegas, Nev., Thursday. Simpson, who is currently serving a nine-to-33-year sentence in state prison for armed robbery and kidnapping, is using a writ of habeas corpus to seek a new trial.
    Credit: AP/Las Vegas Review-Journal/Jeff Scheid

  • Major Tom to ground control: On Sunday astronaut Chris Hadfield recorded the first music video from space, a cover of David Bowie's "Space Oddity."
    Credit: AP/NASA/Chris Hadfield

  • When it rains it pours. President Barack Obama speaks during a news conference Thursday with Turkish Prime Minister Recep Tayyip Erdogan, inexplicably inspiring an #umbrellagate Twitter meme.
    Credit: AP/Jacquelyn Martin

  • A smoke plume rises high above a road block at the intersection of County A and Ross Road east of Solon Springs, Wis., Tuesday. No injuries were reported, but the the wildfire caused evacuations across northwestern Wisconsin.
    Credit: AP/The Duluth News-Tribune/Clint Austin

  • Recent Slide Shows

  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11

Related Videos

Comments

 0 Comments

Comment Preview

Your name will appear as username

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>

follow salon

Most Read

Popular on Reddit

links from salon.com

From Around the Web

Presented by Scribol
listener_new_rect The Listener: So long, Sookie Stackhouse

Recommendations