Huge job cuts in France

FRENCH automotive conglomerate PSA Peugeot Citroen has outlined plans to slash up to 8000 jobs as it prepares to report a €700 million ($A842 million) net loss for the first six months of the year.

In 2014 production will halt at its Aulnay facility in Paris, which builds the Citroen C3 light car and employs 3000 workers, with the site to be converted for other purposes.

Another 1400 jobs will be cut at the Rennes factory in northern France, where the mid-size Peugeot 508 and Citroen C5 are built alongside the C6 large car, all of which occupy sharply declining segments in the European market.

PSA says some of the sacked Aulnay workers will be relocated to the Poissy facility – which also builds C3s alongside the DS3 and Peugeot 208 – but that is located 45km across town, and will help the remaining workers to find jobs in the Aulnay region.

A further 3600 non-assembly jobs will be slashed across all its French bases.

In a statement, PSA chief executive Philippe Varin said he was “fully aware of the seriousness of today’s announcements”.

According to Automotive News Europe, Aulnay workers downed tools and supporters held a protest outside the plant following the announcement, with union leaders promising a “war” with Mr Varin over the cuts.

Mr Varin suggested the struggling group’s plans to reverse its fortunes had been disrupted by Europe’s dire financial situation and said PSA is not expected to return to the black until 2015.

“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 said.

“A company can’t preserve jobs when it’s burning €200 million a month in cash.” Part of PSA’s problem is that European government bailouts during the global financial crisis were handed down on the condition that companies avoided plant closures, leading to a large gap between output and capacity.

PSA recently reported a worldwide sales dip of 10.7 per cent for the first half of this year, with a 10 per cent decline in Europe, where sales were down 21.5 per cent in Italy, 13.3 per cent in France and 10.2 per cent in Spain.

The group’s executive vice-president of brands, Frederic Saing-Geours, said the tough European market made PSA’s move to reposition itself upmarket while globalising its operations “more relevant than ever”.

PSA’s official first-half financial results will be published on July 25.