Peugeot told to cut jobs in Spain

2012-09-13 14:35

PARIS, France - France's industry ministry is pressing the country's leading automaker to limit the impact of a domestic restructuring set to claim 8000 jobs, by shifting part of the burden to Spain.

Arnaud Montebourg, industrial renewal minister, was expected to raise the issue in talks with PSA Peugeot Citroen chief executive Philippe Varin over a plan that involves shutting the firm's historic Aulnay plant near Paris.

Montebourg said: "It's not just Aulnay. A production line is also set to be lost in Rennes, while the Madrid plant is being kept open."


A spokesperson for Spain's industry ministry said the decision over where the cuts would fall was a matter for a private company and declined to comment further.

Montebourg's proposal is likely to go down badly in recession-scarred Spain, where the government of Mariano Rajoy is close to seeking a sovereign debt bailout as it battles to bring down the European Union's highest unemployment rate of just under 25%.

Montebourg repeated the government's line that the firm's shakeup plan was "unacceptable" as it was and kept up pressure for tweaks.

"We are going to have a debate with Peugeot management about opportunities and choices. Personally I prefer that the emphasis is put on closures outside France rather than inside France," he said.

Peugeot was not available for comment.


Peugeot announced job cuts in July 2012 in response to mounting losses at its core automotive division.

A government-appointed expert week faulted the decision to close the French operations while sparing the plant in Madrid.

Emmanuel Sartorius presented a report that acknowledged the need for capacity cuts in response to weak demand, noting that the firm's small-car plants were running at just 61% of maximum output on average in 2011.

Its conclusions are not binding for Peugeot. The company's works council has mandated a private auditor to produce a separate report on its restructuring plans at the end of November that will make recommendations to limit job losses.

Montebourg said: "It'll be hard to save Aulnay and we are not trying to hide that."

"We're not going to break (Peugeot's) door down. But when there's a national drama like this one we're telling them there are a number of concessions that need to be made and mistakes to be admitted, because there were mistakes and the management bears responsibility for that," he said.

Peugeot hopes its restructuring plan will get it out of a bind caused in part by dependence on the Italian and Spanish markets, which have been battered by the euro zone debt crisis, and its slowness in expanding internationally.

CEO Varin urged the government earlier this year to focus on lowering the cost of labour in France.

The automaker is being squeezed between mass-market competitors building cars in countries with lower costs, such as in eastern Europe, and premium German automakers attacking the middle-range market.