Renault aims to cut 7,500 posts in France

PARIS Tue Jan 15, 2013 6:19pm GMT

Rain drops are seen on the logo of Renault car parked in front of French car manufacturer dealership in Paris, November 2, 2012. REUTERS/Christian Hartmann

Rain drops are seen on the logo of Renault car parked in front of French car manufacturer dealership in Paris, November 2, 2012.

Credit: Reuters/Christian Hartmann

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PARIS (Reuters) - French carmaker Renault (RENA.PA) is aiming to cut 7,500 jobs on its home patch by 2016 to help boost competitiveness as the slump in its domestic and European markets shows no sign of easing.

The job cuts, which are equivalent to 14 percent of Renault's French staff, will be a further blow to President Francois Hollande, who has made creating employment his priority for this year as the jobless rate reaches 13-year highs.

Renault is pushing workers to accept a new nationwide deal on pay and conditions to cut costs and align productivity with cheaper European sites such as its Palencia plant in Spain and alliance partner Nissan's Sunderland factory in England.

The company hopes about three-quarters of the cuts will be achieved through normal staff turnover, a Renault spokeswoman said on Tuesday following the latest in a series of meetings with unions.

Automakers across Europe are having to cut costs and capacity so they can still turn a profit while the euro zone debt crisis and resulting government austerity measures sap consumer demand. Car sales in France, Spain and Italy fell to their lowest levels in years in 2012.

Rival French carmaker PSA Peugeot Citroen (PEUP.PA) is struggling to reverse mounting losses by scrapping more than 10,000 domestic jobs and closing an assembly plant near the French capital.

Japanese carmaker Honda (7267.T) on Friday unveiled plans to cut around 800 jobs at its plant near Swindon in southwest England due to falling demand for its vehicles across mainland Europe.

OVERCAPACITY

Renault, which had some 128,000 employees worldwide at the end of 2011, said it did not plan any compulsory or voluntary redundancies. It also repeated that if it reached a deal with workers, it would forego any site closures in France.

A further meeting is planned with Renault management on January 22.

"It's a reasonable adjustment taking into account the massive overcapacity that the (mass-market carmakers) are facing in Europe," said Macquarie Securities analyst Jens Schattner.

"It gives them annual cost savings without having to reduce aggressively - there will probably be only limited cash out for restructuring charges."

Shares in Renault closed 1.8 percent higher, outperforming the European sector index .SXAP, which up 0.1 percent.

"We have reaffirmed our desire to maintain Renault's corporate and core activities in France, whilst taking the necessary steps to lower the break-even point," Gerard Leclercq, chairman of Renault's France operations, said in a statement.

The job cuts would rise to 8,200, or 15 percent of French staff, excluding new hires over the next four years, according to CGT union representative Fabien Gache. "This is a fresh bloodletting among staff which will weaken Renault further over the coming years," he said.

French car registrations fell 15 percent last month, leaving the full-year down 14 percent to 1.9 million vehicles - the lowest since 1997 - French industry group CCFA said. Renault group's French registrations plunged 27 percent in December.

Hollande's administration is struggling to stop losses of industrial jobs while curbing public spending and raising taxes to try to slash debt in a stagnant economy.

The government pledged this month to reallocate 2 billion euros ($2.7 billion) from its 2013 budget to state-aided job creation.

Finance ministry officials were not immediately available for comment.

Renault has forecast positive free cash flow for 2012. Its sales in the third quarter of last year fell 13 percent for a nine-month decline of 4.7 percent to 29.4 billion euros.

($1 = 0.7482 euros)

(Additional reporting by Christian Plumb; Editing by Erica Billingham)

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