PARIS - Valeo has halted a number of planned capital investments in Germany and France, where labor is expensive. Investments will go to emerging markets.
A senior Valeo executive confirmed that 'some planned extensions have been frozen.'
Valeo is 'investing heavily in developing and emerging countries which offer an economic, social and tax environment favorable to business,' said the company in a statement that accompanied its third-quarter financial report.
Valeo has 27 plants in France and six in Germany, out of a total 61 plants in Europe and 101 worldwide. The company aims to merge 15 of its European operations, which means more plants will close. The rationalization has already started.
A copper radiator for engine cooling was previously manufactured at two sites: Saragosa, Spain, and Pianezza, Italy. All production is now at Saragosa.
Headlamps are produced at two French plants, Sens and Mazamet. A third facility, at Evreux, was closed in September.
Last month Valeo closed its Rei-chenbach, Germany, clutch plant that it opened in 1991, and moved production to Spain and Poland.
A Valeo report on labor costs found that a typical French worker was nearly six times more expensive than a Polish employee. Valeo is currently building three plants in Poland, for clutches, engine cooling parts and lighting systems.
Chairman Noel Goutard warned that 'Valeo will decide its investment and employment policy in (France and Germany) depending on future economic and social developments.' He attacked the French government's intention of cutting the working week from 39 to 35 hours. He said: 'The 35 hours without a cut in wages is a political mirage.'