Renault SA (RNO) gained the backing of a third union to move forward with eliminating 7,500 jobs and freezing wages, boosting the carmaker’s chances of smoothly carrying out its cost-reduction plan.
“We agreed to sign the deal,” Fred Dijoux, the leader of the CFDT union at the Boulogne-Billancourt, France-based carmaker, said today by phone. Two other unions, the FO and CFE- CGC, have already said they would back the deal.
The three unions represent about 64 percent of Renault employees. Under French law, a company needs the support of unions representing at least 30 percent of the staff for a collective bargaining agreement to be valid.
The deal enables Renault to reduce its French workforce 17 percent by 2016 through attrition. Labor leaders also agreed on a wage freeze for 2013 and to increase the average number of working hours. Annual savings from the cuts will reach 500 million euros ($649 million), Gerard Leclercq, head of Renault’s French operations, said on Jan. 30.
“Renault has the backing of unions representing more than 50 percent of its staff, which eliminates the likelihood that the deal may not be implemented,” said Xavier Caroen, an analyst at Kepler Capital Markets, who recommends buying the shares. “It also indicates that Peugeot may be able to strike a similar deal with its own workforce later on this year.”
Renault gained as much as 2.94 euros, or 5.7 percent, to 54.31 euros and was up 4.2 percent as of 4:34 p.m. in Paris trading. PSA Peugeot Citroen (UG), which is seeking to cut 11,200 jobs and close one factory, advanced as much as 38 cents, or 6.1 percent, to 6.70 euros and traded 4 percent higher.
A fourth union, the CGT, hasn’t said yet whether it would back the agreement, Raluca Barb, a spokeswoman for Renault, said today by phone. The CGT represents 25 percent of Renault’s employees.
The next step is a national works council on March 12 to vote on the deal.
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