Renault Agrees With Unions on Job-Cut, Wage-Freeze Plan

Renault SA (RNO), France’s second-biggest carmaker, finalized a deal with unions to cut its French workforce by 17 percent and freeze wages in exchange for not closing any plants in the country for three years.

“It gives Renault the means to revive competitiveness in France,” Chief Executive Officer Carlos Ghosn said today of the deal during a press conference near the company’s headquarters in the Paris suburb of Boulogne-Billancourt.

European carmakers including PSA Peugeot Citroen (UG), Fiat SpA (F) and Ford Motor Co. (F) are cutting jobs and closing factories with auto sales forecast to fall for the sixth straight year in 2013. Renault, whose sales dropped more than any other major carmaker in the region last year, has committed to keeping all its plants in France open until at least 2016 in exchange for the agreement from workers to increase productivity.

Three of the four main unions at Renault, representing about 64 percent of its workforce, last week said they approved the deal. The CFDT, FO and CFE-CGC unions backed the plan, while the CGT, representing about 25 percent of employees, didn’t sign it. Renault has 44,642 French workers.

The agreement is “exemplary because it’s a consensual one, signed by organizations representing more than two-thirds of the employees in a country that is more used to arm wrestling with unions,” Ghosn said.

Eliminating Jobs

The deal enables Renault to eliminate 7,500 jobs by 2016 through attrition. Labor leaders also agreed on a wage freeze this year and to increase the average number of weekly working hours to 35 from 32. The company targets annual savings from the cuts of 500 million euros ($653 million), Gerard Leclercq, head of Renault’s French operations, said on Jan. 30.

In addition to refraining from plant closures in France, Renault vowed to increase auto production in its home country by 34 percent to 710,000 vehicles by 2016. Volume will increase by making 80,000 cars for partners, such as Nissan Motor Co. (7201) The French manufacturer hasn’t specified details of the vehicles to be produced.

“This accord underlines the industrial return of Renault in France,” Industry Minister Arnaud Montebourg said in a statement.

Peugeot is clashing with workers over plans to close its Aulnay plant in the northern suburbs of Paris. The CGT union has succeeded in temporarily blocking the proposal in court. The carmaker plans to reduce its French automotive workforce by 11,200, or 17 percent, in the next two years.

Europe’s second-largest automaker said on Jan. 17 that it planned to open negotiations with unions to reach an agreement to increase the productivity of its plants. Peugeot employs 76,137 workers in France.

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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