Peugeot to close down plant and cut 8,000 in France

PSA Peugeot Citroën, the second largest carmaker based in Europe, announced that it would close a plant near Paris and cut 8,000 jobs in France. Peugeot said it will close the plant in the Paris suburb of Aulnay-sous-Bois in 2014 because the company experienced a deep slump in sales during the first half of this year. “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,” said Philippe Varin, chief executive of Peugeot. The announcement of the 8,000 job cuts come in the heels of the 6,000 layoffs announced last year by Peugeot, which employs a total of around 209,000 people. The plant in Aulnay-sous-Bois would be the first major automotive plant to be shut down in the country in two decades. Peugeot said it has been affected more than other European carmakers because it is heavily exposed in countries like Spain, and that its European plants only operated at 76% capacity in the first six months of the year, down from 86% last year. The company’s brands, Peugeot and Citroën, have not been able to compete with BMW, Mercedes-Benz and Volkswagen’s Audi in the luxury segment. Its domestic rival, Renault, has been selling low-cost cars made in Romania under the Dacia brand. “The big issue with PSA is that they are too Eurocentric,” said Carlos Da Silva, an analyst at IHS Automotive, a research firm in Paris. This has limited the company’s gains in fast-developing markets like China and South America. Peugeot was also late in establishing alliances that would reduce the cost of buying parts and developing new models. In February, the company finally struck a deal with General Motors (GM), and under the agreement, GM acquired a 7% stake in Peugeot. GM’s European car brand, Opel, has also been struggling. The French government is expected to come out with a rescue plan for the beleaguered auto industry. (July 13, 2012)