French auto group PSA announces major job cull | Business| Economy and finance news from a German perspective | DW | 12.07.2012
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French auto group PSA announces major job cull

French automobile conglomerate PSA Peugeot Citroen has said it will axe 8,000 jobs in response to increasing sales problems in crisis-stricken Europe. The announcement triggered a storm of protest among trade unions.

French auto group PSA Peugeot Citroen on Thursday announced it would cut 8,000 jobs to adapt to a sharp downturn in the European market.

A company statement said production at its Aulney site near Paris would be halted, meaning the loss of 3,000 jobs. An additional 1,400 jobs would be axed at the plant in Rennes, with the rest of the job cull to be enforced through cuts across the corporate structure.

"The depth and persistence of the crisis impacting our business in Europe have now made this reorganization project indispensable in order to align our production capacity with foreseeable market trends," PSA Chairman Philippe Varin said in a statement.

Uncompromising response

Varin added he was fully aware of the seriousness of the company's announcement and the shock and emotions it would arouse. Trade union reaction was swift, with labor leaders describing the planned layoffs as "a declaration of war" and "an earthquake."

France's new Socialist government also criticized PSA's plans. "We cannot accept anything like that," Social Affairs Minister Marisol Touraine told the French broadcaster Europe 1. He recalled the 4 billion euros ($4.89 billion) the carmaker had received in state aid in the past couple of years and added that the government would take a thorough look at the restructuring plans and convene a crisis meeting with PSA in two weeks.

Peugeot Citroen defended the job cuts, saying it expected the European car market to shrink by 8.0 percent this year. The company has already had to leave its plants operating at just 76 percent of capacity.

hg/msh (Reuters, AFP)