Peugeot to axe 6,000 Europe jobs

Written by The Financial Times | Updated: Oct 28 2011, 08:11am hrs
By John Reed in London and James Boxell in Paris

PSA Peugeot Citron said it would shed 6,000 jobs in Europe next year as it became the first carmaker to retrench in the face of the eurozone crisis.

The French group said it was cutting 3,500 full-time and 2,500 temporary jobs, part of 800m-euro ($1.1bn) of cost cuts the company presented to its European works council on Wednesday in a bid to restore its core carmaking units competitiveness and profitability.

This came after it cut its earnings forecast for the year and reported a 1.6 per cent fall in third-quarter revenues from its automotive division to 1.31bn euros due to pricing pressure on Europes stagnant market and sourcing difficulties caused by the earthquake in Japan.

Three of the French groups biggest markets - France, Italy and Spain - are at the nexus of the debt crisis weighing on the European economy. Outside France, it has plants in Spain, Slovakia and the Czech Republic.

We are not obviously in a worst-case scenario today, Philippe Varin, Peugeots chief executive, told the Financial Times. However, he added: After what is happening with the euro, we should not expect growth, so we need to reduce our fixed costs.

The carmaker is Europes second-largest by sales after Volkswagen.

The job cuts are hugely sensitive in France, where the carmaker is one of the biggest private sector employers, and the country is preparing for next years presidential elections. The powerful CGT union accused the company of a veritable bloodletting against workers.

Mr Varin spoke to Eric Besson, industry minister, and gave assurances that the company would continue to devote 40 per cent of its production and 80 per cent of its industrial investment to France, according to the ministry.

The French state is not a shareholder in Peugeot, but gave the company a 3bn-euro bail-out loan in 2009 which has since been repaid.

Speaking to the FT, Mr Varin would not say how many of the staff jobs would go in France, and how many elsewhere in Europe. The company is due to consult with unions on the cuts at a meeting on November 15.

Of the 3,500 staff jobs facing the axe, 2,500 are in non-production areas such as sales and administration and 1,000 in production. Mr Varin said that many of the positions could be eliminated through natural attrition and retraining of staff to do jobs formerly performed by agency workers. He said the agency jobs to be shed were mainly in France and in the research and development and IT departments.

The group said that it expected its full-year operating income to be close to break-even because of a more difficult operating environment, down 300m euros from its previous earnings guidance.

The Financial Times Limited 2011