Unions Silent After News
The new French government pushed back from its initial aggressive stance on Peugeot’s plan to shut production in France and conceded that the company had little choice given its current financial circumstances and the state of the market.
The government, in a report, said Peugeot could go ahead with its cuts, but the company had been remiss in its failure to sell higher-value vehicles, and had an overly Eurocentric sales footprint. Peugeot should share some of the pain by forcing its Madrid, Spain, plant to take a hit too.
“The need, in principle, of an industrial re-organisation and job cuts is sadly not contestable,” said the report, commissioned by Industry Minister Arnaud Montebourg.
Earlier this month PSA Peugeot-Citroen shares had been hooked from the CAC-40 stock index because their value had plunged after heavy losses. Peugeot-Citroen reported an operating loss of €662 million in the first half of 2012, compared with a loss of €92 million in the same period last year. Analysts estimates for all of 2012 range up to a loss of €1 billion, with red ink in 2013 too. Peugeot-Citroen announced it would close the Aulnay plant near Paris in 2014 eliminating 6,500 jobs, and axe another 1,500 jobs across the organisation. It has sold assets worth €1.5 billion and launched a €1 billion rights issue.
The report, compiled by the Finance Ministry’s Emmanuel Sartorius, said Peugeot had spent too much on dividends. It spent €6 billion on dividends and share buy-backs between 1999 and 2011. Peugeot said this hadn’t hampered investment in the business.
French unions, which had threatened action to try and stop the Aulnay closure, had little to say after the government report was published, only that the Aulnay plant should be redeveloped.
Neil Winton – September 15, 2012