Renault: Beware of French Governments Bearing Gifts
Let’s say you have one of the most unproductive car factories in the world. Car research firm CSM Worldwide says it’ll run at 37 percent this year and possibly 31 percent next year. So what do you do? That’s right, you crank up production. This story just goes to show you how a bailout can be more of a hindrance than a help. Renault has no choice but to keep production at their plant in Sandouville running despite it failing catastrophically. This is because Renault accepted a €3B bailout loan from the French government. A loan which came with a caveat, “Keep production open at French factories!” And now . . .
Because of the worldwide recession and the push towards more fuel efficient cars, vehicles like the Renault Laguna and the Vel Satis (both of which are made at Renault’s plant at Sandouville) are going to be more redundant (unlike the factory staff). Which means Renault will have an excess of stock, which won’t do their finances any favours. Renault management are trying their best to entice staff to leave with generous rendundancy packages or offering them to work half time and receive 70 percent of their wages. But it just isn’t enough.
Whilst the government loans will help Renault in the short term, it won’t do them any good in the long run. After all, how does one cut costs, without cutting staff or closing factories? Cheaper parts on cars? As if Renault’s cars weren’t unreliable enough. Now, if Renault hand’t taken the loans, they would have been free to close the Sandouville plant, transfer what little production was left to a lower cost factory and make meaningful savings towards the long term life of the company. That kind of thinking has a name, what was it . . . ? Oh yeah, “free market economics.”
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- Redapple2 I think I ve been in 100 plants. ~ 20 in Mexico. ~10 Europe. Balance usa. About 1/2 nonunion. I supervised UAW skilled trades guys at GM Powertrain for 6 years. I know the answer.PS- you do know GM products - sales weighted - average about 40% USA-Canada Content.
- Jrhurren Unions and ownership need to work towards the common good together. Shawn Fain is a clown who would love to drive the companies out of business (or offshored) just to claim victory.
- Redapple2 Tadge will be replaced with a girl. Even thought -today- only 13% of engineer -newly granted BS are female. So, a Tadge level job takes ~~ 25 yrs of experience, I d look at % in 2000. I d bet it was lower. Not higher. 10%. (You cannot believe what % of top jobs at gm are women. @ 10%. Jeez.)
- Redapple2 .....styling has moved into [s]exotic car territory[/s] tortured over done origami land. There; I fixed it. C 7 is best looking.
- TheEndlessEnigma Of course they should unionize. US based automotive production component production and auto assembly plants with unionized memberships produce the highest quality products in the automotive sector. Just look at the high quality products produced by GM, Ford and Chrysler!
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Sarko rides in a C6. And you can't understand the Vel Satis if you've never seen a TGV. In terms of layout and interior design, the Vel Satis is excellent. But it's let down an inferior ride/handling compromise.