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Sarkozy Peugeot aid fails to stop job cuts
(China Daily)
Updated: 2009-02-13 07:52
French President Nicolas Sarkozy granted PSA Peugeot Citroen 3 billion euros to safeguard local jobs. Two days later Chief Executive Officer Christian Streiff said he'd seek to slash the home workforce by 3,000 and pledged to continue building cars abroad. France's biggest carmaker is seeking the voluntary departures this year in addition to 3,500 local job cuts announced in December, Streiff said yesterday in an interview. Strategy is unchanged and will continue to spread production among western European and lower-wage countries, he said. "Streiff wants to show that Peugeot's still in charge and isn't just going to fall into line," said Philippe Houchois, an analyst at UBS in London with a "neutral" rating on the stock. "He's someone who doesn't shy away from conflict, but he wouldn't be doing this if he didn't have the Peugeot family's support in standing up to the government." Sarkozy granted Peugeot and domestic rival Renault SA a total of 6 billion euros in five-year loans on Feb 9 after the carmakers promised to keep French factories running and avoid compulsory firings this year. He also criticized Paris-based Peugeot for importing the 107 and C1 city-cars from a plant in the Czech Republic that Streiff says will remain open. "We've always been very clear," Streiff said. "I don't believe in investing massively in low-cost countries to supply the French market, but being present in different countries is critical. That's the policy we're sticking to." Fighting the slump Peugeot is stepping up job cuts as it fights the worst auto slump in 15 years. After outperforming the European market for much of the year, French registrations fell 14 percent in November and 16 percent in December, pushing the company to report a loss of 1.08 billion euros for the second half, compared with net income of 393 million euros a year earlier. The division of future job cuts between France and the rest of Europe will be "the same as in the past", Streiff said. There are no plans for French assembly of the C3 Picasso minivan, which is going into production in Slovakia, he added. "Mr Streiff has given signed undertakings," Sarkozy said yesterday in comments to reporters during a visit to Kuwait. "I shall make sure they are respected." Streiff said Peugeot's plans "respect the spirit of the agreement" with the government, as well as the letter. Peugeot is aiming to repay its state loan in two years, the earliest possible under the aid terms, after which it will in any case be freed of its commitments to the government, Chief Financial Officer Isabel Marey-Semper said in an interview. "It's in Peugeot's interests, as well as the state's, if we can get cheaper finance elsewhere," the CFO said. The company anticipates that bank credit may become available at affordable rates following the "reassuring" outcome of the aid talks, she said. Including the 3,000 additional job cuts in France, which the company aims to achieve through worker buyouts, Peugeot will eliminate 14,000 posts in western Europe this year, most of them in its home country, Marey-Semper said. "They're bound to do some hidden restructuring in France, following a softly-softly approach," said Adam Jonas, an analyst at Morgan Stanley in London with an "overweight" rating on Peugeot. "Even if you don't close plants for two years or fire anybody there are still things you can do. That's the message here." Streiff said he has the full support of the Peugeot family, the carmaker's largest shareholder with a 30 percent stake. On Feb 5, as the aid negotiations neared a conclusion, financial daily La Tribune reported that the family was split over whether to sack the CEO, citing an anonymous government official. A call to the secretary of supervisory board Chairman Thierry Peugeot wasn't immediately returned. Agencies (China Daily 02/13/2009 page16) |
