Peugeot Citroën has had a poor year so far. First-half sales are down 13% and the company is forecasting a loss for the six-month period. Consumer demand is proving stubbornly sluggish, and production at Peugeot's sites has slowed to a glacial pace: it is currently operating at just 76% capacity on average.
To keep the show on the road, Peugeot has been forced to implement some harsh cost-cutting measures. Last November, it slashed headcount by 6,000. Now, to save a further €1bn, it is shutting down a handful of plants. The Aulnay factory near Paris, which employs 3,000 workers, will grind to a standstill by 2014. Another - at Rennes in western France - is laying off 1,400 of its 5,600 staff. And a further 3,600 jobs will be axed across Peugeot’s other production facilities.
Peugeot's chairman, Phillipe Varin, has expressed his sadness over the plans: ‘I am fully aware of the seriousness of today's announcement, as well as of the shock and emotions they will arouse in the company,’ he says.
Peugeot is attempting to be sensitive about the cuts, citing a ‘redeployment of staff’ in its announcement. But before you cry ‘C’est des conneries’ (pardon MT’s French), around half those currently employed at Aulnay will indeed be offered new roles at Peugeot's sister plant at Poissy. Nonetheless, unions are up in arms, calling Peugeot’s move ‘a declaration of war’.
It’s hard to see what else the French carmaker could do, however. Times are hard and the firm’s recent attempts to drive up sales have all been in vain. Earlier this year, it signed a deal with General Motors to make co-branded range of cars – Peugeot is desperate to tap into GM’s global reach. It paid dearly for the privilege. GM now owns a 7% stake in Peugeot, making it the second-biggest shareholder in the French firm after the Peugeot family. No (furry) dice as yet, however.
It hasn’t helped that Britain has also managed to gobble up the lion’s share of European car production, taking the manufacturing focus away from France and Germany (plants have closed in Bochum and Rüsselsheim this year alone). But with overcapacity about to double to two million vehicles this year, according to HIS Automotive, there’s a lot more pain to come for the European carmakers…