Peugeot Delays Job Cuts Until Court Rules in Dispute

PSA Peugeot Citroen (UG), the French carmaker that consumed about 200 million euros ($262 million) a month in cash last year, will postpone job cuts by at least 10 days as it awaits a court ruling on the strategy.

A judge overseeing a lawsuit by the CGT union aimed at canceling the workforce reduction asked Peugeot to postpone a meeting with labor leaders until after the court reaches a decision on April 26, Fiodor Rilov, the union’s lawyer, said by phone. The meeting to set financial terms for the reductions has been delayed to April 29 from April 19, Jean-Baptiste Mounier, a Peugeot spokesman, said in an e-mail.

The CGT has three court cases opposing plans by Paris-based Peugeot, Europe’s second-biggest carmaker, to scale back its domestic workforce by 11,200 employees, or 17 percent, in an effort to restore profit. Another five unions representing 76 percent of employees support the strategy.

“A plan that is supported by unions representing more than 76 percent of employees is fully legitimate, so any other decision than the backing of that plan would be risky,” Yasmine Tarasewicz, the lawyer representing the carmaker in the legal cases, said in a phone interview.

The delay in the labor leaders’ meeting with Peugeot means that workers who want to leave and benefit from severance payments must wait until mid-May, said Christian Lafaye, the leader of the FO union, which supports the plan.

‘Bad News’

“This postponement is bad news for the company as well as for the employees who want the plan to be fully implemented as soon as possible,” he said.

Peugeot reported a 576 million-euro operating loss last year. Efforts to revive earnings include shuttering a factory in Aulnay, on the outskirts of Paris. The judge in the CGT court case asked for the union-management meeting delay at an April 11 hearing, Rilov said.

Peugeot said on Feb. 13 that cost reductions in 2012 totaled 1.18 billion euros in 2012, beating a target of 1 billion euros. Asset disposals, including a stake in its Gefco trucking unit, totaled 2 billion euros. Chief Executive Officer Philippe Varin pledged that day to bring the automaker to a break-even level by the end of 2014 through the reorganization and a new strategy that includes moving the Peugeot brand upscale.

In a separate procedure, the Paris appeals court ruled on Jan. 28 that Peugeot had to suspend its plans to cut jobs and shutter the Aulnay site as employee representatives at Faurecia (EO), the company’s 57 percent-owned auto-parts subsidiary had to be informed about the consequences of the program. Bruno Courtine, the lawyer representing Nanterre, France-based Faurecia, said on April 8 that labor representatives at the division were now fully informed.

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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