PSA Restructuring Includes Plant Closure, 8,000 Jobs Cut

Derek Kreindler
by Derek Kreindler
psa restructuring includes plant closure 8 000 jobs cut

It’s been a long time coming, but PSA has finally done it ; the parent company of Peugeot and Citroen is cutting 8,000 jobs and closing an assembly plant outside Paris, as the carmaker tries to cope with a sagging market and excess capacity.

Of the 8,000 jobs being shed, 3,600 are not related to assembly work, while 3,000 are expected to come from the Aulnay plant outside France’s capital. 1,400 will come from the Rennes plant, which builds larger vehicles like the Citroen C5 and Peugeot 508, models that have seen demand drop off in the wake of Europe’s economic downturn.

According to Reuters, PSA’s plants are burning $244 million a month, with cash flow not expected to turn positive until 2015. PSA’s first-half losses in 2012 amounted to $857.5 million. With significant exposure to troubled markets in Europe (i.e. the PIIGS countries), no low-cost brand (like Dacia for Renault) and an uncompetitive small car lineup for Peugeot, the company’s fortunes are hardly bright.

The move by PSA could be the catalyst for a wave of restructuring moves across Europe. Carlos Ghosn, head of Renault-Nissan, told Reuters in March that “The day somebody’s able to restructure heavily in Europe, it’s going to force all carmakers to do it,” while Fiat CEO Sergio Marchionne has long advocated for a way to reduce capacity, via closing plants or finding additional ways to take advantage of it.

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  • Best time to go on vacation in Europe is RIGHT NOW - while their economies are collapsing. My cousin just came back from Paris. Didn't cost a whole lot.

    • See 1 previous
    • @30-mile fetch Right now a flight to Greece is about $1200 but, if you book in August you can go for less than $700 round trip!!!

  • Jpolicke Jpolicke on Jul 12, 2012

    Guess their new socialist president is working out about as well as Mr. Hope & Change did here. But it's all good, since executive pay is now capped in France. In light of this, how is the announcement of Renault's plan to set up manufacturing in Algeria going down?

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    • Jpolicke Jpolicke on Jul 12, 2012

      @challenger2012 Right, never mind that the debt was increased in 3 years by more than GWB raised it in 8, and that it produced nothing in results. Challenger, I can read a calendar as well as you, so I'm not blaming Obama for the recession. I blame him for epic waste and failure. FWIW, I don't blame GWB (although I don't think much of his presidency) for the recession either, since the subprime crisis was the result of decades of Democratic tinkering with lending standards. The Dems made themselves out as heroes for making sure the "right" people got mortgages, and when the whole house of cards fell down the banks got blamed for being reckless and greedy. And while I certainly wouldn't expect miracles from a French President after only 2 months in office, I nevertheless find it amusing that the priority was the executive pay cap. The politics of envy - I'm not getting any more, but that rich SOB gets less so I'm happy.

  • El scotto El scotto on Jul 12, 2012

    I do appreciate TTAC reviews about vehicles that we can't get in the US. PSA and other manufactures that don't sell in US need to. Why? Thier competitors are selling in the US and making more money from US sales. We may be considered nitwits or barbarians by other countries but man, we sure buy a lot of stuff.

  • Oldyak Oldyak on Jul 13, 2012

    maybe if Peugeot and Renault had maintained a presence in the north American market this would not have happened.But then they would have to build good cars...