Peugeot Reaches Deal With Majority of Workers on Job Cuts

PSA Peugeot Citroen, Europe’s second-biggest carmaker, struck a deal with French unions over plans to reduce its headcount in the country by 17 percent.

Five unions representing 76 percent of workers have agreed to the severance packages that Peugeot will offer as it seeks to eliminate 11,200 posts, Denis Martin, industrial operations chief, said today at a press conference at the company’s Paris headquarters. The automaker will also close a factory in Aulnay.

Peugeot, which reported a 576 million-euro ($747 million) operating loss last year, suffers from a reliance on the European car market, which is set to decline for a sixth straight year in 2013, and higher production costs in France, where the automaker employs close to 50 percent of its workers.

The agreement with unions will be signed “very quickly,” Martin said today. The full implementation of the restructuring plan requires a final works council meeting that will take place soon, Martin said, without specifying a date.

The shares gained 9 cents, or 1.5 percent, to 6.63 euros at the close of trading in Paris today. The stock has advanced 21 percent this year, valuing the company at 2.35 billion euros.

Renault SA last week finalized a deal with unions to cut its French workforce and freeze wages in exchange for not closing any plants in the country for three years.

Before it's here, it's on the Bloomberg Terminal.