PSA's Varin urges gov't action on labor costs
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Varin has called for government help to reduce labor costs, but says he will not seek state subsidies to assist PSA. |
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PSA/Peugeot-Citroen CEO Philippe Varin called for the French government to take action to reduce labor costs, a day after the automaker said it would cut 14,000 jobs and close its Aulnay plant near Paris as part of wide-reaching restructuring plans.
"We would like to see a reduction of the charges weighing on labor costs," the CEO said in an interview with French daily Liberation.
Varin, speaking with the newspaper and RTL radio on Friday, also sought to ease tensions with unions, by signaling flexibility over the implementation of cost-cutting measures.
"There is room for maneuver in the implementation of these decisions," he said.
PSA will also seek to create 1,500 new jobs through the conversion of its Aulnay factory site near Paris to accommodate other industries and companies after its 2014 closure, Varin added.
Announcing the job cuts on Thursday, Europe's No. 2 automaker warned of a first-half net loss and said its core manufacturing division was burning 200 million euros ($245 million) a month. Operating cash flow will stay negative until 2015, the company said.
"The bad news is the level of pain that Peugeot are currently suffering to get to this point," Barclays Capital analyst Kristina Church said in a note on Friday.
Government concern
France's new Socialist President Francois Hollande told ministers he was "extremely concerned" about the cutbacks and urged them to minimize the social fallout, his office said on Thursday.
Prime Minister Jean-Marc Ayrault called the closing and workforce reductions a "true shock."
But the government has stopped short of demanding that PSA abandon the plan, drawing the wrath of the country's powerful unions.
"You get headlines that the French government might not be entirely happy with the plan that Peugeot has presented here," said Erich Hauser, a Credit Suisse analyst in London. "That leaves the shareholders in a very vulnerable position and makes it increasingly likely that you need some sort of government support.''
Varin said Thursday at a press conference that seeking state help is "not on the agenda."
The French government is set to unveil a broad auto-sector support plan on July 25.
Reuters and Bloomberg contributed to this report
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