Renault Union Says Plants May Shut Without Labor-Cut Deal

Renault SA (RNO), France’s second-biggest carmaker, may shutter two factories in the country unless it reaches an agreement with unions on increasing productivity, holding back pay and cutting the workforce, a labor leader said.

A plant in Flins is most at risk of closing, Dominique Chauvin, head of the CFE-CGC union at the carmaker, said today by phone during a break in talks with management. The carmaker “isn’t threatening to close an industrial plant,” as talks are aimed at finding ways to increase competitiveness, Raluca Barb, a Renault spokeswoman, said by phone in response.

The carmaker said earlier today that it’s willing to increase production in France by 15 percent once a labor deal is reached. Boulogne-Billancourt-based Renault began talks with unions in November as part of efforts to sustain profit while Europe’s car market falls to almost a two-decade low. Detroit- based General Motors Co. (GM), which is unprofitable in the region, said today that it may accelerate a German plant’s shutdown.

Renault is asking unions to agree to a wage freeze in France this year and then raises of 0.5 percent in 2014 and 0.75 percent in 2015, the carmaker said today in a statement that didn’t specify plans in the absence of an agreement.

Renault fell 0.6 percent to 43.25 euros at the close in Paris, valuing the carmaker at 12.8 billion euros ($17 billion). GM dropped 2.3 percent to $28.60 at 12:04 p.m. in New York, paring the stock’s 12-month gain to 15 percent.

Helping Partners

The French carmaker’s domestic factories may build 80,000 more vehicles a year by 2016 to supply manufacturers that the company cooperates with, including Nissan Motor Co. (7201) and Daimler AG, it said. Renault’s current full-year production in France amounts to 530,000 vehicles for its own brand, according to Sophie Chantegay, another spokeswoman.

“The signing of an agreement will allow our French plants to be sufficiently competitive to attract volumes coming from our partners,” Gerard Leclercq, Renault’s head of operations in France, said in the statement.

Renault’s global deliveries fell 6.3 percent to 2.55 million cars and light vehicles last year, led by a 19 percent plunge in Europe. The company forecast on Jan. 18 that industrywide European car sales will drop 3 percent in 2013 in the sixth straight annual contraction.

Job Cuts

The manufacturer said after talks on Jan. 15 that it wants to eliminate 7,500 jobs through 2016 at French operations, or 17 percent of Renault’s workforce in the country. Leclercq said at the time that the measures could be achieved by not replacing people who retire or leave voluntarily, rather than by firings. The job cuts are intended to produce about 400 million euros in savings, Renault said today.

Total workers’ pay amount for 60 percent of Renault’s fixed costs in France, the company said. The manufacturer’s proposals come on top of other plans, including a 6.5 percent increase in work hours at the country’s plants that would reduce spending by 65 million euros.

GM’s Opel unit may stop building the Zafira van at the factory in Bochum as soon as the end of 2014, when a labor agreement securing production at the plant runs out, Stephen Girsky, the U.S. carmaker’s interim chief in Europe, wrote in a letter to employees today. Opel had said previously that it would stop making the Zafira in Bochum in 2016, when the plant would be closed.

“Negotiations with the works council are still ongoing,” Johanna Lomp-Knetsch, an Opel spokeswoman, said in a telephone interview. “No decisions have been made yet.”

Renault and Opel both lost European market share in 2012 as their deliveries fell faster the industrywide drop of 7.8 percent. Renault ranked third in the region, accounting for 8.4 percent of sales, compared with 9.5 percent a year earlier, while Opel and its sister Vauxhall brand had a combined market share of 6.7 percent, versus 7.3 percent in 2011.

To contact the reporter on this story: Mathieu Rosemain in Paris at mrosemain@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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