French carmaker Peugeot Citroen has set out plans to cut 8,000 jobs and close an assembly plant outside Paris as losses mount.
Last week, Peugeot said its first-half sales had fallen 13% amid a "profound crisis" in its eurozone markets. Peugeot's chairman, Phillipe Varin, said the situation was grave.Closures and Firings
"I am fully aware of the seriousness of today's announcement, as well as of the shock and emotions they will arouse in the company," he said in a statement.
Unions described the announcement as a "declaration of war" and an "earthquake", the AFP press agency reported.
The carmaker said it expected to report a loss for the first half of this year and to return to break-even by the end of 2014.
Peugeot also this year entered into an alliance with GM of the US, under which GM takes a 7% stake in Peugeot, making GM the second-biggest shareholder in the French firm after the Peugeot family.
The company said the effects of that deal would not be felt until after 2014.
- The Aulnay plant near Paris, which employs 3,000 workers, would stop production in 2014.
- Another plant, at Rennes in western France, is set to shed 1,400 posts from the 5,600 it employs there.
- Another 3,600 jobs would be lost across all facilities in France.
Press Release
Here is the official press release: Peugeot Citroën Presents a Project to Reorganise
Shape of Things to Come
This is a start of what I expect to happen. For further discussion, please see Global Collapse In Auto Sales Coming Up.
More importantly this may be the trigger for French president Francois Hollande to follow through with his Economically Insane Proposal: "Make Layoffs So Expensive For Companies That It's Not Worth It"
Alternatively, it may be an act by Peugeot to fire workers while they still can. This is how I described the proposal in the preceding link:
Four Things, All of Them Bad
- Mass layoffs will occur before the law passes.
- Companies will move any jobs they can overseas.
- Ongoing, if it's difficult to fire people, companies will not hire them in the first place.
- Corporate profits will collapse along with the stock market should the need to fire people arise.
The proposal to force companies to sell plants rather than fire workers as outlined by Industry Minister Arnaud Montebourg and Labour Minister Michel Sapin is nothing short of economic insanity.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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