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Peugeot warned: Revamp, or die

2012-09-14 09:05

DESPERATE PEUGEOT, CITROEN IN JOBS TUSSLE: A worker of PSA Peugeot Citroen shows a badge, reading: "Save our jobs with unions". Image: AFP

Laure Fillon

PARIS, France - French auto giant PSA Peugeot Citroen has been warned that it must restructure urgently and tie up with a global group after posting sweeping losses due to strategic errors over two decades.

A damning government-sponsored report said Europe's second-biggest automaker after the Volkswagen group, and which recently entered a limited alliance with General Motors, had missed the bus on globalisation.

A restructuring was inevitable and the firm had to "act urgently to get on top of the situation," the report by government expert Emmanuel Sartorius said.


"The need, in principle, for a plan to reorganise industrial activities and reduce the workforce cannot be challenged unfortunately."

It said that "in the medium and long term, the future of PSA lies in a strategy of an alliance with a big world automaker."

The report was commissioned by the new Socialist administration of French president Francois Hollande against the background of a plan by the group to close a landmark plant north of Paris and shed 8000 jobs across France.

French industrial renewal minister Arnaud Montebourg, who had attacked the job cuts and PSA's corporate strategy, had conceded that it was "really in trouble" and needed "restructuring", a union official told AFP.

Franck Don from CFTC union said Montebourg would propose tripartite meetings between the state, union officials and the management to "review" the mass lay-offs and other plans.

"Therefore his position in July has been totally forgotten," he said.

Hollande on Tuesday said state institutions "will do everything they can to reduce the number of layoffs" after talks with PSA employees.

Montebourg meanwhile called for an "exemplary and transparent social dialogue to examine options aimed at renegotiating, reforming or reducing" the redundancy package.

The company was known to be under pressing financial strain but the announcement of the cutbacks soon after the new government was elected came as a shock and caused considerable uproar in France.


The report said the company was too dependent on the European market, which still accounts for 50% of its sales.

Its positioning as a carmaker to all model ranges added to its difficulties given that eastern Europe led in the production of cheaper models and Germany dominated in more-expensive and luxury cars.

The report, revealed to trade unions on Tuesday, severely criticised management and shareholders for their past strategy but appeared to support the company's general line that there was no alternative to deep changes.

PSA Peugeot Citroen, which is not controlled by the French state and in which the Peugeot family keeps a strong voting interest, has dropped out of the Paris CAC 40 leading stock index and been beset by poor sales. The report said it had erred "in choosing to maintain its independence", adding that "management lacked in ambition in trying to internationalise the group".

It also denounced the plan for mass job cuts at the emblematic Peugeot plant at Aulnay, north of Paris, saying "history would have been written in a different manner if the management had engaged in a transparent dialogue with social partners and state authorities."

The company aims to break even by the end of 2014.
Read more on:    vw  |  gm  |  francois hollande

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