Tuesday, July 17, 2012
France's finance minister says Peugeot job cut plan "isn't acceptable"
As expected, the French government issued a firm "Not so fast" to Peugeot's desire plan to shutter a plant in Aulnay, France and get rid of jobs. The plant closure has been in discussion for a while, but the layoff headcount has been rising every time it gets reported, going from 6,000 to 8,000-10,000, and now reaching 14,000 workers that Peugeot wants to shed.
Both Peugeot-Citroën and Renault received billions from the French government during the financial crisis, the quid pro quo being that the companies wouldn't close factories and eliminate jobs. The companies' business positions aren't much better now, with Peugeot's overcapacity touching 25 percent. Sound business practice would dictate getting rid of assets dragging on the balance sheet, but the company remains bound by the deal it made the with the French government.
Nevertheless, the government knows that Peugeot has to do something – a carmaker that drags on state resources while sinking with every job intact is still no good to anyone. So even though French President Francois Hollande has said he wants to rework Peugeot's stated aims and French finance minister Pierre Moscovici said the plan "isn't acceptable" as is, Moscovici elaborated on that by saying "We are here to find solutions," and "I'm here to build."
The idea is to assure everyone that Peugeot's straightjacket will be loosened a bit, even if it's not free to do completely as it wishes. But it also sounds like the French government is getting ready to open the door to worker redundancies – not 14,000 of them, but it seems inevitable that a fair number of jobs will have to go.