FRENCH CARMAKER PEUGEOT Citroen has announced plans to cut 8,000 jobs from French factories and close an assembly plant outside Paris, the first closure of a car factory in France since 1982.
Peugeot-Citroen said it would close the Aulnay plant near Paris, which employs 3,000 people, after first half delivery of cars fell 13 per cent.
The announcement, which comes on top of 6,000 redundancies last year, has been described as “an earthquake” by unions.
However, with with European car market expected to shrink by 8 per cent this year, the company had little choice, it said.
“I am fully aware of the seriousness of today’s announcements as well as of the shock and emotions that they will arouse,” the Chief Executive Philippe Varin said at a press briefing in Paris.
“The depth and persistence of the crisis impacting our business in Europe have now made this reorganization project indispensable in order to align our production capacity with foreseeable market trends.”
Peugeot-Citroen is particularly exposed to Southern Europe, where car sales have slumped during the euro crisis, an analyst told Bloomberg. “But more broadly speaking, it seems to be stuck in the middle between Volkswagen at the top of the market, and Hyundai/KIA at the bottom.”
A sharp downturn in the European market mean’s has left the manufacturer’s plants operating at 76 per cent capacity for the first half of the year, down from 86 per cent last year. Its auto division is now expected to report an operating loss of some €700m.
General Motors said last month that it planned to close the first German factory since World War II. Fiat made a similar announcement last week, when it said it may close a second Italian plant after closing a factory in Sicily.
On Monday, France’s Central Bank said it expects the euro zone’s second largest economy to have shrunk in the second quarter as business sentiment worsens. It said the the French economy would shrink 0.1 per cent after posting zero growth in the first quarter.
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