Peugeot announces 8,000 job cuts by 2014
8,000 French workers have been made redundant with news that PSA Peugeot Citroen's Aulnay plant is to close in 2014, with further redundancies in its Rennes-based plant and more across the country.
The last plant closure in France was over two decades ago underlining the current ill health throughout the industry in Europe.
After announcing 3,000 job losses in Aulnay, 1,400 losses in Rennes and 3,600 more across the nation, Peugeot chairman Philippe Varin called for the French government to take action to reduce labour costs, telling RTL Radio: "We would like to see a reduction of the charges weighing on labour costs."
"I am fully aware of the seriousness of today's announcements, as well as of the shock and emotions they will arouse in the company and its stakeholding environment.
"The depth and persistence of the crisis impacting our business in Europe have now made this reorganisation project indispensable in order to align our production capacity with foreseeable market trends," he added.
Peugeot lost £552million in the first half of 2012, and the company continues to haemorrhage an estimated £159million each month.
As Europe's second-largest automaker Peugeot is one of France's largest employers, with close to 100,000 workers on the payroll. Arnaud Montebourg, Industry Minister has voiced his discontent, describing the cuts as "an earthquake for the French economy" and a "declaration of war".
"We don't accept Peugeot's plan in its current form," he told parliament. He has also asked ministers to 'ask Peugeot to examine all other possible solutions in good faith'.
Newly-elected French president Francois Hollande has told ministers to minimise the social fallout, according to his office, and expressed that he was "extremely concerned" about the cuts. The French government is expected to release a broad auto-sector support plan on July 25.
Peugeot's shares plummeted by 7.5 percent at 10:15 this morning (British time) as investors digested the restructuring plans. Peugeot is expected to have negative operating cash flow until 2015.
1,500 jobs are expected to be created after the Aulnay factory closes in 2014, as the converted factory will be able to accommodate other businesses and industries.
"In this way [cutting jobs], we will secure the group's future and our car production base in France," adds Mr Varin.
Written by John Meadowcroft