January 12, 2010 / 12:35 PM / 10 years ago

Renault in eye of French protectionist storm again

* State puts pressure on Renault over production

* Company needs to cut costs in industry crisis

* Renault shares down 1.25 percent

By Marcel Michelson

PARIS, Jan 12 (Reuters) - The French government is putting pressure on the country’s second-biggest carmaker to safeguard jobs in France and buy French products as an economic crisis and unemployment fan deep-rooted protectionist feelings.

Christian Estrosi, Industry Minister and mayor of the Mediterranean coastal town of Nice, has summoned the chief operating officer of Renault (RENA.PA) to his offices on Wednesday as the group considers producing a new small car in Turkey. The state has a 15.01 percent stake in Renault.

“I tell you very clearly that we are shareholders of Renault ... and so we have the right to say what we think. We have the right to affirm that when we sell a Renault car in France, and Renault is a French name, a French brand, we do not produce it abroad,” he told France 2 television on Tuesday.

Estrosi’s outburst chimes with similar remarks by President Nicolas Sarkozy about preserving jobs in France and about the strong euro hampering exports. However Finance and Economy Minister Christine Lagarde has not joined in the Renault bashing, yet.

Patrick Pelata is second in command at Renault after Carlos Ghosn, who also heads Japanese ally Nissan Motor Co (7201.T) — the second-biggest shareholder with a stake of 15.00 percent.

The alliance of Renault and Nissan, which also includes Korea’s Samsung, Romania’s Dacia and Russia’s AvtoVaz AVAZ.MM, is among the biggest car groups in the world, along with Toyota Motor Corp (7203.T) of Japan and Germany’s Volkswagen AG (VOWG_p.DE).

Renault is in a better financial situation than General Motors [GM.UL], Chrysler FIA.MI or Mitsubishi Motors Corp (7211.T). But according to the weighted estimates in StarMine, financial analysts expect a net loss of 2.6 billion euros ($3.77 billion) for 2009 and a small profit of 100 million euros in 2010, with a return to a more substantial 1.1 billion profit in 2011.

The year 2009 was supposed to have been a year of celebrations at Renault, following a much-touted profit and performance enhancement plan by Ghosh. But the credit crisis and steep fall in consumer spending and car sales derailed that.

Renault is now seeking to boost sales in emerging countries

— like Turkey — and reduce production costs. — like Turkey — and reduce production costs.

GLOBAL CITIZEN VERSUS MAYOR OF NICE

Pelata, born in 1955 in the hamlet of Pujols near the Pyrenees mountain rage, is a global citizen and is not facing an upcoming regional election, in which unemployment will be a key issue for the political future of Estrosi and the current government of Prime Minister Francois Fillon.

Not that Pelata is insensitive to social issues — the Ariege region where he was born is a hotbed of labour struggles and he was a member of a communist student group at the same engineering school where he met Ghosn — according to friends in a profile story in the Challenges weekly in 2008.

Renault, a former state-owned group after the state seized assets following World War Two and Nazi production, was a bastion of unionist power, centred on a now abandoned production island in the Seine river at Boulogne-Billancourt, near Paris.

Pelata joined Renault in 1984 as an assembly manager at the plant at Flins, north of Paris, which is now the focus of Estrosi’s attention. He rose through the ranks and went to Tokyo and Nissan in 1999 with the small band of Ghosn lieutenants to turn around the Japanese group. There he met his second wife, Ayami Nakao, who is a Paris-based publicist for Japanese media.

At the heart of the conflict is the issue of where the new Clio IV small car will be produced, with Renault leaning towards a site in Turkey, while Flins, a site for an older version of Clio, would make the Zoe electric vehicle as well as electric batteries in 2012. Flins was the subject of an earlier spat between the government and Renault as well.

“Renault will need to convince (the state) that even if the Clio IV goes to Turkey, that will not reduce activity and work in France,” a sector analyst said.

(Additional reporting by Anna Willard and Gilles Guillaume; Editing by Rupert Winchester)

((marcel.michelson@thomsonreuters.com; +33 1 4949 5130; Reuters Messaging: marcel.michelson.reuters.com@reuters.net))

($1=.6889 Euro) Keywords: FRANCE/RENAULT Keywords: FRANCE/RENAULT=2

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