French Productive Recovery Minister Arnaud Montebourg will question PSA Peugeot Citroen, Europe’s second-biggest carmaker, over its plan to eliminate 14,000 jobs to ensure that no more positions are cut than needed to save the company.
Peugeot today said it will shut the Aulnay auto factory, the first closing of an auto plant in France in 20 years, and reduce its workforce by 6.7 percent to stem widening operating losses. The government named an an adviser to examine Peugeot’s plan.
“Peugeot has a duty to France as a nation,” Montebourg said on France2 television today. “Job-cut plans can’t be abusive. They have to be strictly in line with the real needs of a company.”
The carmaker needs to close the Aulnay factory outside Paris and eliminate jobs to stop using up about 200 million euros ($244 million) in cashflow per month and to raise the utilization rate of its factories, Chief Executive Officer Philippe Varin said at the same time on French television station TF1.
“We have to stop the hemorrhaging and that’s why we are making this decision,” Varin said. “We can’t continue to operate with half-full plants.”
Peugeot, Renault SA and Fiat SpA this year posted the biggest declines in car sales in Europe, where Peugeot now expects the market to contract 8 percent. Moody’s Investors Service in March was the last of the three main credit-reporting companies to cut Peugeot’s debt rating to junk.
Peugeot dropped 1.7 percent to 7.02 euros in Paris trading today. The stock has plunged 73 percent in the last year, giving the carmaker a market value of 2.49 billion euros, or 4.3 percent of 2011 revenue.