French auto giant PSA to slash thousands of jobs in Europe

26th October 2011, Comments 0 comments

French auto giant PSA Peugeot Citroen on Wednesday said it planed to slash thousands of jobs in Europe as part of an 800-million-euro cost-cutting plan amid a stagnating European car market.

Nearly 6,800 jobs among group employees and subcontractors are at risk.

The group announced to unions at a meeting Wednesday that 800 temporary positions would already be cut by the end of the year, a union source said.

For 2012, the company said, another 1,000 manufacturing jobs would be cut through voluntary departures, up to 2,500 non-production positions would be eliminated and another 2,500 jobs were expected to be cut through the elimination of outsourcing contracts.

The cost-cutting programme comes after the company announced that sales in its cars division were down 1.6 percent to 9.3 billion euros ($12.94 billion) in the third quarter. However, overall sales were up 3.5 percent in the third quarter to 13.45 billion euros.

"The competitive environment has become more challenging due to pricing pressure, which has intensified in Europe since September," the company said in a statement.

"In this tougher environment, recurring operating income for the automotive division is now expected to be close to break-even for the full year," it said.

In a separate statement after the union meeting, PSA said the cuts "are designed to streamline the group's organisational structures or to adjust project budgets, particularly in sales, marketing, information technology and research and development."

The company, France's largest automaker and Europe's second-largest after Germany's Volkswagen, employs more than 205,000 people in the world, including 100,000 in France. It employs 167,000 people in total in Europe.

The new plan comes on top of a savings programme announced in 2009 that aims to save a total of 3.7 billion euros.

CGT union representative Bruno Lemerle slammed the savings plan as "scandalous."

"Logically when the results are good, the company should employ people, try to develop," Lemerle told AFP, pointing to the increased overall turnover figure.

"Our workload is excessive as it is, we don't need a reduction in the workforce," he said.

With two huge manufacturers, PSA and Renault, France's auto industry is key to the country's economy and accounts for around 10 percent of the overall workforce.

Industry Minister Eric Besson is to meet Varin to discuss the layoffs, his ministry said.

Chief financial officer Frederic Saint-Geours said during a teleconference the company expected growth in the European market to stabilise, but for sales to grow seven percent in China, six percent in Latin America and 30 percent in Russia.

The company also said Wednesday it plans to make new investments to double its production capacity in Brazil.

PSA shares were up 2.67 percent to 17.52 euros on the Paris exchange following the announcements.

© 2011 AFP

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