Renault aims to cut 7,500 posts in France by 2016
PARIS -- Renault said it aims to cut 7,500 posts in France by 2016 to help its automotive operations in the country to reach break even.
The automaker hopes about three-quarters of the cuts will be achieved through normal staff turnover, a Renault spokeswoman said on Tuesday.
Renault isn't planning any plant closings in France, CEO Carlos Ghosn said at the Detroit auto show. He said he expects the European market will drop another 3 percent this year. Last year, the region's auto sales fell to a two-decade low.
The measures are intended to reduce Renault's fixed costs by 396 million euros ($528 million), Dominique Chauvin, head of the CFE-CGC union at Renault, said, citing a management briefing of labor leaders. The manufacturer's production in France last year fell 18 percent to 530,000 cars, Chauvin said.
Renault is pushing its workers in France to accept a new nationwide deal on pay and conditions to cut costs and align productivity with cheaper European sites such as its Palencia plant in Spain and Nissan's Sunderland factory in England.
Renault, which had some 128,000 employees worldwide at the end of 2011, said it did not plan any compulsory or voluntary lay offs. It also repeated that if it reached a deal with workers, it would forgo any site closures in France.
"It's a reasonable adjustment taking into account the massive overcapacity that the (mass-market carmakers) are facing in Europe," said Macquarie Securities analyst Jens Schattner. "It gives them annual cost savings without having to reduce aggressively - there will probably be only limited cash out for restructuring charges."
Renault has forecast positive free cash flow for 2012. Its sales in the third quarter of last year fell 13 percent for a nine-month decline of 4.7 percent to 29.4 billion euros.
Gerard Leclercq, chairman of Renault's France operations, said: "We have reaffirmed our desire to maintain Renault's corporate and core activities in France, whilst taking the necessary steps to lower the break-even point."
The job cuts would rise to 8,200, or 15 percent of French staff, excluding new hires over the next four years, according to CGT union representative Fabien Gache. "This is a fresh bloodletting among staff which will weaken Renault further over the coming years," he said.
Automakers are facing a sustained decline in the European car market as the euro zone debt crisis and government austerity measures sap consumer demand. Car sales in France, Spain and Italy in 2012 fell to the lowest levels in years.
French car registrations fell 15 percent last month, leaving the full-year down 14 percent to 1.9 million vehicles - the lowest since 1997 - French industry group CCFA said. Renault group's French registrations plunged 27 percent in December.
PSA/Peugeot-Citroen, Ford Motor Co., and General Motors Co., are all trimming their European workforces and closing plants in response to plunging demand in the region.
PSA is eliminating 11,200 French jobs, or 17 percent of its workforce, and closing a factory on the outskirts of Paris. GM is closing a plant in Bochum, Germany, threatening 3,100 positions, while Ford is shutting three European factories and cutting 5,700 posts in the region.
Reuters and Bloomberg contributed to this reportContact Automotive News