Peugeot Citroen to slash 8,000 jobs
The French carmaker is struggling with mounting costs
By CFOWorld staff | CFO UK | Published 11:54, 12 July 12
Peugeot Citroen is to cut 8,000 jobs and close an assembly plant in a major organisational overhaul and an attempt to cut costs, the French carmaker said on Thursday.
The Aulnay plant near Paris, which employs more than 3,000 workers, will stop making cars in 2014 as part of a drive to reorganise Peugeot's under-used domestic production capacity, the company said on Thursday.
A second factory in the western city of Rennes will shed 1,400 of its 5,600 jobs as the company downsizes in response to shrinking demand for larger cars such as the Peugeot 508 and Citroen C5. Some 3,600 non-assembly jobs will also be scrapped across the company.
It will be the first car plant to cease production in France for 20 years, posing a challenge to new Socialist president Francois Hollande's objective of reviving industrial production, as it could also hasten a wave of restructuring in western Europe.
The government said it was studying the closure plan but stopped short of condemning it, incurring the wrath of France's biggest industrial union, the hardline CGT.
Prime minister Jean-Marc Ayrault promised in a statement to ensure that Peugeot helps laid-off Aulnay workers find new jobs and said ministers would present a wider auto industry support plan 25 July.
"I am fully aware of the seriousness of today's announcements," chief executive Philippe Varin said in a statement. "The depth and persistence of the crisis impacting our business in Europe have now made this reorganisation project indispensable."
Peugeot said it would post a net loss in the first half and a €700 million (£555.1 million) operating loss for the core car-making division.
The manufacturing operations are burning €200 million a month, with cash flow not expected to turn positive until 2015, the company said.
photo credit: Reuters
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