PARIS -- PSA Group is resisting government demands that it raise a bailout offer to struggling supplier GM&S, ahead of a Wednesday bankruptcy hearing that may decide its fate.
The threat to GM&S and its 277 jobs is in the political spotlight, as a first industrial policy test for new President Emmanuel Macron's government.
Finance Minister Bruno Le Maire, who took office in May, is pushing for up-front grants of 5 million euros ($5.8 million) from PSA as well as rival Renault, with a matching contribution from the French state.
Renault has agreed to contribute 5 million euros and commit to another 50 million in parts orders over five years, raising the pressure on PSA, the maker of Peugeot, Citroen and DS cars.
"PSA has confirmed to the minister that it did not wish to participate in this financing," Le Maire's office said in a statement on Monday.
The stand-off deepened on Tuesday as PSA reiterated that it would not go beyond its current offer of a 60 million-euro order commitment over the same five-year period. The Paris-based manufacturer also plans to invest 4 million euros in its own tooling for the GM&S plant.
"We have already made an enormous effort to advance this rescue plan," a PSA spokesman said. "GM&S is in this situation today because of other clients who cut their orders."
In support, PSA circulated a July 17 letter in which supplier GMD's CEO Alain Martineau informed PSA boss Carlos Tavares that the existing offer is "sufficient to support the site's operations."
GMD is proposing to keep "at least 120" of the 277 workers currently employed at GM&S in the economically deprived central Creuse region of central France.
The factory makes parts such as brackets and bumper supports. Striking workers from the site blocked a Renault logistics hub in Burgundy on Tuesday.
The Poitiers commercial court is due to rule on the rescue plan for the company on Wednesday.