The 7,500 job cuts at Renault’s staff in France, equivalent to about 14% of its workforce, represent a damaging blow to President Francois Hollande, who has prioritized creating and maintaining jobs as his priority as the unemployment rate reached 13-year highs. Renault is encouraging workers to agree to a new nationwide deal on pay and conditions to reduce costs and align productivity with inexpensive European sites like its Palencia plant in Spain and alliance partner Nissan's Sunderland factory in England.
A Renault spokeswoman said that the company is hopeful that around three-quarters of the cuts will be attained through normal staff turnover. Automakers throughout Europe would need to cut costs and capacity so they can still be profitable while the euro zone debt crisis and resultant government austerity measures drain consumer demand.
In 2012, auto sales in France, Spain and Italy declined to their lowest levels. Its rival, PSA Peugeot Citroen, is working hard to reverse increasing losses by terminating over 10,000 domestic jobs and shutting down an assembly plant near the French capital.
Last Friday, Honda revealed plans to reduce about 800 jobs at its plant near Swindon in southwest England because of the decreasing demand for its vehicles throughout mainland Europe.
Renault, which had about 128,000 workers around the world at the end of 2011, said that it didn’t plan any compulsory or voluntary redundancies. It also reiterated that it would not close any of its sites in France once it entered a deal with workers.
A meeting with Renault management is scheduled for Jan. 22. Macquarie Securities analyst Jens Schattner said that this is a “reasonable adjustment” considering the huge overcapacity that the (mass-market carmakers) face in Europe. It provides annual cost savings without being forced to make drastic reductions so there would likely be just limited cash out for restructuring charges.